Author Topic: Should I buy an investment property in San Francisco or elsewhere?  (Read 2000 times)

Passive_Walrus

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Fellow Mustachians,

I've saved ~300K to invest in a property. My goal is to generate passive income. I have zero debt, no kids, mid 40s and live in SF with my fiance in a condo he owns. So my "rent", if you want to call it that, is low. I've been waiting for this mad SF bubble to diffuse (I don't think it will pop) for the last 3 years and in the meantime my money is not working too hard for me.  I think it's better to wait to buy in SF but I'm wondering if I am better off buying a investment property elsewhere to get a better return?
At least the bay area has as robust economy and I am really nervous about buying in markets I know nothing about. Any advice for a real estate noob on cities/markets in the US to consider for real estate investment? Would be great to hear from folks who've done this - what have you learned? what were the surprises? Books/articles I should read? Thanks much! 

Syonyk

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #1 on: October 18, 2017, 06:44:59 PM »
What does $300k in SF get you?  A single story cardboard box?

Index funds are a good place to park money...

lbmustache

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #2 on: October 18, 2017, 06:51:30 PM »
What does $300k in SF get you?  A single story cardboard box?

I'm curious too... $300k in coastal SoCal gets you a studio, barely.

Just be realistic about what being a landlord entails. Are you financially prepared for vacancies, emergencies, etc.? If you pick a property elsewhere, realize some of your profit will go to a property management company.

Passive_Walrus

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #3 on: October 18, 2017, 06:53:38 PM »
What does $300k in SF get you?  A single story cardboard box?

Index funds are a good place to park money...

ha! true. But I can get a loan, that 300K is my downpayment money. So I can get something for up to 700k or so.

affordablehousing

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #4 on: October 18, 2017, 07:48:47 PM »
I think the ship has sailed. The only reason to buy in SF is if you want to live in SF, or if you want to be a slumlord in the Tenderloin. Much smarter to invest in index funds, or a reit if you want more explicit real estate exposure. Sacramento could be an option for you to look at but that's probably too far. If you want that much exposure to real estate, why not get a diversified pool of real estate investments through one of the many online outfits. I think they are all run by 20 year olds who don't understand real estate, but at least you'll be exposed to different markets.

You can definitely find something for $700K, like maybe a one bedroom earthquake cottage in Bayview. Those are hip and ripe for appreciation.

MrThatsDifferent

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #5 on: October 18, 2017, 08:42:06 PM »
I think the ship has sailed. The only reason to buy in SF is if you want to live in SF, or if you want to be a slumlord in the Tenderloin. Much smarter to invest in index funds, or a reit if you want more explicit real estate exposure. Sacramento could be an option for you to look at but that's probably too far. If you want that much exposure to real estate, why not get a diversified pool of real estate investments through one of the many online outfits. I think they are all run by 20 year olds who don't understand real estate, but at least you'll be exposed to different markets.

You can definitely find something for $700K, like maybe a one bedroom earthquake cottage in Bayview. Those are hip and ripe for appreciation.

LOL. The snark is strong in this one.

undercover

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #6 on: October 18, 2017, 09:13:34 PM »
"saved $300k to invest in property" sounds like you specifically earmarked that amount of funds for a real estate purchase. If that's the case, it also sounds like you did this relatively quick. If that's the case, it probably doesn't matter what you do with your money.

If the above isn't true, I'm not sure how you actively put away that much money towards and didn't read anything about investing in the interim. Start with BiggerPockets and go from there. Short answer: do not invest in SF for cash flow, and only for appreciation if you're going to live there yourself and $300k will be a small portion of your portfolio five years down the road.

Passive_Walrus

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #7 on: October 18, 2017, 09:20:22 PM »
"saved $300k to invest in property" sounds like you specifically earmarked that amount of funds for a real estate purchase. If that's the case, it also sounds like you did this relatively quick. If that's the case, it probably doesn't matter what you do with your money. If the above isn't true, I'm not sure how you actively put away that much money towards and didn't read anything about investing in the interim.

Thank you for the suggestion and no this didn't happen overnight. I've been saving for buying a property since 2009.. it took me 8 years to get here and I invested in the stock market, EFTs and mutual funds. I pulled out of the stock market last year with the hope of buying a place in a year or two.

Grogounet

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #8 on: October 18, 2017, 11:57:09 PM »
If you want to invest absolutely in RE, why not buy EFT based like REIT?
I own real estate and the leverage is great as long as you can stand a downturn IMO.

Dicey

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Re: Should I buy an investment property in San Francisco or elsewhere?
« Reply #9 on: October 19, 2017, 01:16:27 AM »
You could just wait for the next big earthquake, lol.

Better still, invest in cheap ETFs and have less stress in your life.