Another Millbrae home sold less than $1k sq feet. it has 2.5 bath with 4 decks views.
Millbrae price is stagnating and Millbrae is first destination after moving out from SF shack.
https://www.zillow.com/homes/95-Colorados-Dr-Millbrae,-CA,-94030_rb/15508715_zpid/?
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One idea is to buy rentals in places like Austin, Denver, Raleigh, … and rent in Bay Area. One of my ex-tenant did that. Austin has higher yield and appreciation than Bay Area. So have the cake and eat it, got to stay in bay area for free and yet enjoy price appreciation.
Very good point. Cap rate in south bay is around 3%. So, rents are cheap compared to buying (making mortgage payments for) the house.
This might be a good model for the younger professionals who want to own real estate to build wealth or have a home of their own to retire to some day, but are priced out of the Bay Area.
Once you have a property and RSUs, you won’t be priced out if you insist on making BA as a permanent home. You can afford to buy a BA house later in your career. IMHO, unless your NW is more than $30M+ upon retirement (and you really like BA), the opportunity cost of staying in BA during retirement is pretty high.
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Exactly. BA’s landlords are subsidizing you, the renter 
Based on current market price and rent, yield is only 2%, cap rate would be even lower. So not sure how to get 3%, SJ area? mine is in CU.
Do you say that for Bay Area specifically or CA in general because it is a high cost state?
If it is for Bay Area specifically, I am not sure $30M net worth is necessary to retire in Bay Area, if one owns the home outright. I see plenty of older retirees living in $2.5-3M SFHs in the RBA. I would think most of them have modest means, much less than 30M. The house is probably the most valuable asset they own. Of course Prop 13 works in their favor, but even for those of us who bought in the last few years, prop taxes won’t be too high - maybe 2-2.5k a month, thanks to the same Prop 13 caps.
Cap rate is operating income/value of the property expressed in %. CU might have higher cap rate, but it can be around 3% in Milpitas, Freemont and and San Jose etc depending upon property.
I am not sure I agree. Yes, the mortgage + prop tax is more expensive than rent, but there is a significant principal repayment part in the monthly mortgage. That principle repayment is essentially a forced saving, rather than being seen as an expense.
Interest portion of mortgage + prop tax - whatever state and federal tax write off one can get (even under recent Trump tax code) is roughly equal to the monthly rent.
what about HOA and mello-roose tax which many young professionals get while buying new construction? Still your theory holds?
50% of bay area residents rent
Well, I was making the comparison based on SFHs in established neighborhoods (I.e., typically 50+ year old ranch houses). They have no HOA.
I am not familiar with mello-roose tax, please explain
ok got it. It’s special tax which almost all new construction have and it can’t be claimed in tax. From what I read, city is happy to have it as it decreases the burden. I booked a new construction and yearly have to pay $2800. I am sure many here have more knowledge about it than me.
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Your retirement not their retirement. I am projecting into the future.
Cost incurred by landlord = mortgage interest + property tax + insurance + maintenance + appliance replacement + property management (or your time) + HOA (if applicable) + vacancy
$30m not enough. Are you kidding?
For me retirement will be whenever either the local companies in my industry no longer want to employ me, or if health no longer permits. Same goes for my spouse. So, it’s hard to define when retirement will be.
If I relocate back to my home country, I no longer have to work. If we relocate out of state (TX, AZ, FL), can sell the RBA house and buy for cash in those states with some money left over. Then, we will only need one income.
But that is actually more work and disruptive than just continuing to work here in Silicon Valley, mostly remotely and showing up to the office from time to time as needed. Kind of following Newton’s first law: a body in motion follows a straight line unless acted upon by an external force that causes it to change direction. Absent that external force, there is no motivation to leave BA, now or in “retirement”.
They can sell their $3m homes and live anywhere. $3m is enough to retire if you are 65 or older.
I meant that one does NOT need $30M to retire in Silicon Valley. That’s a king’s retirement. Can retire with ordinary middle class lifestyle with a paid off house + $5M in investable assets + Social security/pensions
Another Millbrae home updated sold for $1k per sqfeet with 8K sq feet lot and deck. Prices not rising relative to inflation
https://www.realtor.com/realestateandhomes-detail/558-Anita-Ln_Millbrae_CA_94030_M21012-42725#photo64