Knowing where to buy investment property in the East Bay is an important part of your strategy. This market is unique; prices are high, but so are rents. Additionally, the tenant pool offers stable renters with good jobs and financial security. Working with a San Ramon property manager, a CPA and an attorney can help you develop a complete road map of what’s most important to you as an investor and how to reach your investment goals in light of your risk tolerance.
Advantage Property Management Services manages both single-family and multi-family rental investments in San Francisco’s East Bay, serving cities in Alameda and Contra Costa counties, including but not limited to San Ramon, Danville, Pleasanton, Livermore, Dublin, Castro Valley, and San Leandro.
Here are some questions we consider important to address:
- What is your long-term investment strategy?
- Are you concerned with asset appreciation or immediate cash flow?
- Will you live in the property at some point in the future?
- Do you have the financial reserves to weather an extended vacancy or large repair (like a roof replacement)?
- Are you comfortable investing in less desirable properties that have upside potential or do you prefer new construction?
Investment Strategy: Appreciation
In this market, investors are generally buying for long-term appreciation, not for cash flow. Historically, the area has had a housing shortage, and that trend seems to be continuing. Typically, high demand and low inventory drive prices up which is a good strategy for long-term appreciation.
New Construction vs. Older Homes
You are likely to earn more money on an older home. You’ll be able to spend less and make some basic repairs and updates that increase the rental value. Lot sizes are also typically larger on older homes than on new ones; tenants like that extra space and are willing to pay a little more in rent for a larger backyard.
Location is Critical
Most investors know that “location, location, location” plays an important role in property value and rental rates. Look for properties in good school districts as that is important to a lot of tenants. Look also for units that are close to shopping, restaurants, entertainment, and commuter routes.
Consider Multi-family Properties
If you want a solid portfolio of rental properties that minimizes risk, consider multi-family units. A building with five or more units will change a cap rate based on your investment percentage methodology. Many feel the best investment value in this area is going to be a building with 10 or more units. You have more buying power and a lot more income potential with this type of property. You’ll lose less if a unit is vacant and you can protect your ROI. The value of a single apartment is going to be less than the value of a condo or a single family home and you can use that to your advantage.
Real estate prices in the Bay Area are at record highs. There are still opportunities, nonetheless, to make smart investments with the right properties. Structure your acquisitions so your cash flow is positive or close to positive. You’re investing for the long term, and few places will be able to match the increase in value and ROI you can find here.
We’d be happy to help you with your real estate investment needs in the East Bay. Simply give us a call at Advantage Property Management Services.