This question has been asked a lot over the past three years, especially from speculative investors.
Although we have not fully recovered from the housing crash, most financial advisors still view real estate as a good solid investment. They base their views on the fact that historically, even in hard economic times people will buy homes and developers will purchase commercial buildings. This viewpoint has been proven in many cities such as Cleveland, San Francisco, and Phoenix.
In the city of Cleveland, a lot of residential real estate investment activity has been going on during the past three years. Some of these investments have been made by local investors, but there has also been a lot of interest from out of state investors as well. The key markets these investors are targeting in the Cleveland area are older homes in established neighborhoods. Although many of the properties have been abandoned, the majority are in relatively good shape. The price point for these properties is in the $75,000 to $100,000 price range. Once the homes have been purchased, they are totally renovated and sold for a profit. In most cases the profit margin is between 25 to 35%. The homes that are not sold are converted into rental properties usually with an option to buy. So far this strategy has been working, which has really helped to boost Cleveland’s local housing market.
The city of San Francisco has also seen a lot of real estate investment activity over the past few years. Unlike Cleveland where a large number of investment properties can be purchased for under $100,000, the majority of investment properties in San Francisco are in the $1,000,000 range. These properties are usually two bedroom bungalows or row houses less than 1,000 square feet. When these properties are renovated, they can be sold for $2,000,000 or more. The demand for homes is very strong in San Francisco, and most properties appreciate in value within six months to a year.
Commercial properties in San Francisco are also currently considered good investments. One of the things driving the commercial market is the growing number of companies relocating to the Bay Area. Many of these companies are technology startups that have secured capital to expand their business. Part of their expansion plan is to purchase a small office building and hire additional staff.
So if you have a lot of money to invest in real estate, you should consider checking out investment properties in San Francisco.
Before getting involved in real estate investing however, you should educate yourself about the real estate investment process. This should include determining if your budget is best suited for commercial or residential investing. You should also have a separate budget in case the property you purchase needs major upgrades and repairs.