The location is pretty good in Santa Clara. What are better locations?
Cap rate is NOI divided by the purchase price. It is a measure of relative value. The property value is there irrespective of the interest rates. Of course 2% interest rates help in cash flow and will lead people to except lower cap rates. Location affects cap rates also. In Sacramento and Tahoe people expect 5-7 caps. The BA 3-4 cap rates depending on the neighborhood. Low caps means the anticipation of high appreciation.
Ironically Tahoe has had high appreciation and high caps… The holy grail.
And BA and SF negative appreciation and low cap 
So keep you powder dry or invest elsewhere
Nowhere good left to invest. Fed printer is on 24x7.
2 Likes
I don’t like neighborhoods with cardboard box fourplexes stacked one on top of each other. Low rents and low quality tenants. Better to pay a little more for the odd multifamily in an otherwise single family neighborhood.
Forget RE. Invest in stocks.
Everyone is saying that the great California exodus will only accelerate after pandemic. I really wonder if this will lead to 10x reduction in RE prices in SF Bay Area. RE is all about supply and demand and when supply will far exceed demand and when taxes and costs will exceed income the house of cards will all come down falling. Is it time to sell?
There is no such thing as a 10x reduction. The worst that can happen is a 100% reduction to $0, which is only 1x.
Wishful thinking?
Whatever post on the net today, you just let the “bad news” dictate your thinking.
Let say if I am a positive person, it is not hard at all to find “good news” to support my claim:
My rental house estimate by redfin has beend 10% increase since March.
Lots of SFH listing in San Francsico sold less than a week or two. I still have not seen price reduction for SFH in SF.
2 Likes
You must be a very positive person. The exodus is real. 62% tax rate is real. Socialist policies are real.
It does not take an Einstein to see the implosion coming.
Zillow and Redfin projections are a joke - they were projecting 10% drop in March.
I stated let say. I posted those postive news as examples to illustrate my points as not relying on what posted on the net.
Like yourself thinking price reduction caused by the Covid, I am been watching the RE in SF closely to find good deal (SFH), and so far I have not seen one.
Just remember end of the day, you are the one who makes the decision, rest of us here are pretty much fakenews anyways 
For SB where I have SFH rentals, I noted rent have been declining but house prices are increasing.
So my hypothesis is renters have either left the area or are buying SFHs because of the twin reason of pandemic and low mortgage rate. Hence demand for rentals has decreased while demand for SFHs have increased.
Some owners could have left the area temporarily and renting out their houses. That is supply of rentals has increased.
2 Likes
This is exactly what happens just before any bubble burst.
1 Like
Not sure there is a bubble. Prices in SB has started to decline since Oct 2018, bottom around Jun 2020 and now is re-bouncing. Prices are still below ATH in Oct 2018.
When rent is falling as price increases, some landlords would prefer to sell. So long the increase in supply is less than the demand, prices would continue to increase. As economy opens up, some people will come back (less supply of rentals + increase demand of purchase since not likely to want to rent). Depending on the availability of vaccine and how businesses prefer to operate (degree of WFH allowed), demand may not weaken.
1 Like
RE prices are sticky. Prices may drop a bit. But might come roaring back with an effective vaccine. Buying makes more sens than selling if you can find a bargain
It’s much easier for renters to move when their lease ends. Renters also tend to be younger people who are more mobile. Most people with kids (which are most home owners) aren’t going to uproot their family over this.
Can the election result affect this? Bay Area has been successful due to many immigrant techies moving in. Once the h1b doors are open again, they will come flooding in. People leaving may be outnumbered by influx.
On de centralizing tech presence, I personally don’t see a clean long term solution for that. I have a few new employees on my team, and getting them ramped up has been super difficult - and they’re local, just on zoom. I can’t imagine how to train them if they’re also in diff timezone.
1 Like
Just to clarify my thinking on this, there were few things Biden wanted to do:
- Remove H1B cap for PhD holders.
- Remove country-based caps for green card.
- Support lifting the minimum wage for H1B jobs.
All these are great news for STEM degree holders. Underfunded startups would have to hire Americans from local, while more established firms can afford to fly candidates in from all around the world (this was the case pre-2016).
1 Like