The best place to buy a home in the San Francisco Bay Area is one where you have OCEAN VIEWS. In every major city in the world, ocean view property trades at a premium. Only in San Francisco do ocean view properties trade at a discount.
People think that the weather isn’t as nice in the western portion of San Francisco or south of SF near the water. But I’ve been living in SF since 2001 and it is obvious that it’s become warmer and there are less foggy days.
Further, 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), that will likely outperform in price appreciation over the next several years.
Here’s a map of San Francisco where I highlight in red where I think you will find the best buying opportunities with panoramic ocean views.
The Bay Area has had a great run in property price appreciation so far. Please don’t lose your mind and get into a bidding war at this late stage in the cycle. Rents are softening, but prices are at an all-time high. See the two charts below.
As you can see from the chart, the end result is that San Francisco property valuations are sky high. I sold my Marina (north end) SF rental property for 30X annual gross rent, and redeployed $550,000 of the proceeds in real estate crowdfunding to buy non-coastal city property with 5X higher net rental yields. Fundrise is my favorite platform.
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 to arbitrage the incredible price differences around the country now that real estate crowdfunding is available.
The only property I would buy in the Bay Area now are ocean view homes, fixer uppers, or properties with massive expansion potential where you can build for less than $500/sqft and sell for over $1,000/sqft. Otherwise, be careful with SF Bay Area real estate now. The NASDAQ is at all-time highs, prices are up 70% since 2012, and the cap rates are very low.
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!
Below are some past investment examples of REC investments.
Fundrise Growth And Performance
According to the latest public offering documents by Fundrise for its IPO, the firm manages roughly $488 million in assets under management, has 63,271 active investors, and 76 employees. 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.
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. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $200,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
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