The best place to buy property in the SF Bay Area is one where you have OCEAN VIEWS. In every major city in the world, ocean view property trades at a big premium. Only in San Francisco do ocean view properties trade at a discount to the median.
Why is that?
People think that the weather isn’t as nice in the western portion of San Francisco or south of SF near the water. But the reality is, when it’s foggy in San Francisco, it’s pretty foggy almost everywhere. Only in Portero Hill and The Mission districts is the weather nicer. However, it’s a different vibe in these two neighborhoods.
If you have a family, you likely want to live in a less dense neighborhood that’s quieter with less crime. Therefore, you will naturally want to move to the western portion of San Francisco where you get more space for the money. And what’s great about the western portion of San Francisco is that you can find homes with ocean views.
The Best Place To Buy Property In The SF Bay Area
I’ve been living in SF since 2001. I’ve owned homes in The Marina and Pacific Heights. Now I’ve been methodically buying ocean view homes on the west side. I truly believe the best place to buy property in the SF Bay Area are in Golden Gate Heights, Sunset, Parkside, Richmond, West Portal, and St. Francis Wood. See the map below.
Thanks to Uber and Lyft, transportation is now cheap and ubiquitous. There’s no longer a reason to pay a premium to work close to your soul-sucking job. You can now enjoy living in a more picturesque, quiet neighborhood that’s much more affordable (40% cheaper. It will likely outperform in price appreciation over the next several years as well.
Thanks to the global pandemic, people don’t have to commute to work as much anymore. A normal working week might be 2 or 3 times in the office and 2 or 3 days at home. As a result, it’s only logical to buy a single family home on the more affordable west side of SF. Over the years, it’s also become warmer and there are less foggy days.
Here’s a map of San Francisco that highlights the best area to buy.
Solid Historical Rent And Price Appreciation
San Francisco has experienced strong historical price appreciation. Although, there is pricing pressure with condos as people are looking for more space.
Below is the rent trends in the SF Bay Area. After taking a dip during the 2020 pandemic, rent prices are rebounding once more.
Post-pandemic, big city real estate is back. And if you plan to live in San Francisco or any big city for longer than five years, I’d buy now. The best place to buy property is where you can see yourself living for at least five years.
Diversify Your Real Estate Investments
Once you’ve made a nice little fortune owning an ocean view home in San Francisco, you can then parlay those proceeds using my BURL method of Buying Utility, Renting Luxury. It is a way to arbitrage the incredible price differences around the country now that real estate crowdfunding is available.
The main type of property I would buy in the SF Bay Area now are ocean view homes, fixer uppers, or properties with massive expansion potential. Expanding a property by building for less than the selling price/sqft is the easiest way to make money in real estate.
If you want to buy a house in the Bay Area, buy one to live in and enjoy life. I wouldn’t be buying rental property and commercial real estate here. There are much better opportunities out there. Find the next San Francisco Bay Area!
Personally, I’ve invested $810,000 in real estate crowdfunding in the heartland of America. Due to demographic shifts, more people are moving to lower cost areas of the country. I want to capture the trend over the long run.
Take a look at my two favorite real estate crowdfunding. Both platforms that are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. These cities potentially have higher growth as well due to demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
Fundrise Growth And Performance
According to the latest public offering documents by Fundrise for its IPO, the firm manages roughly $1 billion in assets under management and has over 150,000 active investors. Their AUM grow and investor signups have been very promising.
Fundrise’s five-year average platform portfolio has also done quite well, yielding a 10.79% return versus 7.92% for the Vanguard Total Stock Market ETF and 7.4% for the Vanguard Real Estate ETF. Their massive 14%+ outperformance in 2018 versus the Vanguard Total Stock Market ETF is particularly impressive.
By generating a strong 5-year return, Fundrise has taken a huge step forward in proving out what they have believed for so long: that a model of individuals diversifying into real estate through a direct, low-cost technology platform is a superior investment alternative to owning only publicly traded stocks and bonds.
Buy a single family home on the western side of San Francisco. Then actively invest in real estate through REITs, eREITs, real estate crowdfunding and more. You’re really only long real estate if you own more than one property.
About the Author:
Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $300,000 a year in passive income. He spends time playing tennis, hanging out with family, and writing online to help others achieve financial freedom.
FinancialSamurai.com was started in 2009. It is one of the most trusted personal finance sites today with over 1.5 million organic pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal. The Best Place To Buy Property In The SF Bay Area is a FS original post.