Real Estate Investors Compete Against First-Time Homebuyers.

With regards to this recent blog about investors competing against would-be homebuyers, it has definitely been my experience that this is taking place - in a large percentage of the offers I have seen recenty, especially in the low price ranges. One sure sign: in about 30 to 50% of the cases, the winning offer was all cash.

This is absolutely prevalent where a condominium is offered for sale, and more than 15% of the units in the complex are deficient in their dues payments to the association. In that case, I do not know of a bank that will lend money to buy the property. Only a cash buyer can puchase. Why buy in such a complex, with a fair risk that for lack of funds there will be deferred maintenance all around?  Because the rental income is worth it. And later on, when the real estate market improves, valuations will bring in more gains.  It is clear to me that many (real estate) investors have confidence in the Valley.

But I have also seen it in regular sales, where the dues problem does not exist. With prices very low now in the Valley, investors have been moving in; this has been taking place for at least a year in my experience, - and a little more for houses. Lowest prices were mid-2009.


Francis

Silicon Valley real estate

Invest in the Bay Area?

Some of my clients have been interested over the years in placing some money in a modest investment, in the Bay Area. The reasons may vary, but often it is to use the property later for themselves, or for their kids, and to benefit from the good appreciation that we enjoy here - or the good value that it holds over time.

A rule of thumb in the world of real estate is that whereever there is appreciation, the return on investment (ROI) is pretty small, and where the ROI is good, appreciation is much less.

In the Bay Area, I have often counselled my clients to look into areas moderately priced, but with excellent schools. I submit as examples the following two complexes in Mountain View (which as a City is a good middle ground between the very expensive and the cheapest areas of the Bay):

- The Old Mill Complex;
- the Parc Crossings: http://www.theparccrossings.com/

These links, besides giving a history of prices in the complexes, also give detailed resources as to the schools.
I hope you find this of interest.
Francis

Silicon Valley Real Estate

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