Investing in real estate.

Investing in real estate -

I recently read an article from NewsGeni.us that I found quite interesting, dealing with real estate investing.

Without repeating the whole article here I thought I would comment on some of their points:

Their advice is:

Focus on promising areas - the clientele in the SF Bay Area has been well served by believing in the local area in the past 30 and 40 years. 5 years ago though a lot of people got scared and some sold, or did not buy when they could have.  For those who bought when no one believed in it, I say “bravo”!  However the Bay Area is just one choice, mostly based on price appreciation, not return.  Indeed until very recently, the return on investment was not great - purchase price very high, rental fairly low. 

I personally chose another route: an area with very little appreciation, but with traditionally good return .  With the help of an investor mentor (thank you Louis!), my family invested in real estate in Texas.  There, the gross return was more like 10 to 11% per year, as opposed to ~3% in the Bay Area at the time.  The area was promising because of the job market, which had been very consistent, and strong.  Since it continued to be strong, the rental market stayed strong.

Never spend more than you can afford - unless you buy cash, mortgages start to add up when you purchase rental properties.  You have to count on a few set-backs, like damage due to weather, vacancies, repairs tied to finding new tenants, etc…  if you do not have reserves, it can start becoming a stretch.  Plan on a certain amount of unknowns, and I would say, plan generally on costs being higher than they should be.  (like insurance costs….).

All of the advice is well taken in this article called “When is the right time for investing in property?” .   I would add another item: choose a good management company (if you are going to invest away from where you live, or if you do not plan on managing yourself).  This is essential to staying out of trouble, so-to-speak.  That company should be used to missed payments and how to deal with them, and they should be well organized and standardized in their procedures.  Getting referrals or testimonials is very important in my opinion.

If you are thinking about investing in real estate, share your thoughts with me - I’d love to help you out with what I learned so far on the matter.

Thanks for reading,

Francis

Silicon Valley real estate

Trends: Local prices and graphs.
A noteworthy local non-profit event:  Coalition on Homelessness, SF

Home Improvements - ROI

How much should you expect to get back on a given home improvement?

 

It turns out that it depends on where you are, as much as the type of improvement you are planning to make.  Below are two infographics - 1 showing projects with not such great returns, and one showing those that have the best returns; these are provided by the California Association of Realtors and therefore are more appropriate for California. 

 

However, my experience is that here in the Bay Area of San Francisco, the returns are better than what would be typical anywhere else in the US.  In fact, this is something that one can verify by going to the "cost vs Value" web site link from this page out of the online Realtor magazine , and looking for instance at the "Pacific zone" and in particular " San Francisco", where the return for a kitchen remodel or a 2nd bath remodel will indeed be in most cases over the cost of the improvement.

(Click on the picture to enlarge)

 

 

As always, thank you so much for reading, and if you like what you read, let your friends know!

 

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

Fix Ups for Property Resale

Are you a homeowner preparing your home for sale? If you are, you may want to consider these 6 real estate fix up tips. They will help you increase your chances of getting the most return at the time of sale, for a modest cost. We can often overlook the simplest things but these 6 tips will ensure that you optimize for the maximum payout.

"Money wisely spent is money wisely earned."

• Cleaning and de-cluttering - costs $290 but yields a $1,990 Return (put things in boxes, since they will end up in boxes anyway)
• Brightening - costs $375 but yields a $1,550 Return  (clean and clear windows, update light fixtures)...
• Smart staging - costs $550 but yields a $2,194 Return
• Landscaping enhancements - costs $540 but yields a $1,932 return (new flowers, nice colors, clean up...)
• Repairing electrical or plumbing - costs $535 but yields a $1,505 Return - time to repair these little things that have been left alone...

• Replacing or shampooing dirty carpets - costs $647 but yields a $1,739 Return

The yields are estimates of course, but a good indication of the results.

The ROI (return on investment) on performing these property fix ups is pretty good, so consider them closely. The time spent performing the tasks are plainly worth the effort.

The 6 home fix up tips were the result of a Home Sale Maximizer Survey released by HomeGain.com. - the result of a survey of nearly 600 real estate professionals to try to find out what pays the most. The survey was to aid home sellers in determining what to consider to prepare their homes for sale time.

Let me know, as always, how I can help!

Francis,

Silicon Valley Specialist

Local Real Estate resources

Silicon Valley Market Trends