San Francisco is all about its neighborhoods. This is a city that’s full of diverse and vibrant culture and history. There are upscale neighborhoods like Nob Hill and the Marina area, as well as casual and family-friendly communities like North Beach and Presidio. Richmond and the Sunset District are just outside of the metropolitan hum, while Union Square and the Embarcadero are right in the middle of all the action.
When you’re looking to invest in a rental property, you want to choose a neighborhood that fits both your budget and your perfect tenant profile.
Consider Your Price Point
The first thing you’ll need to establish when choosing a neighborhood is your budget. The amount you are able to spend on your purchase will immediate qualify and disqualify several specific communities. When you’re crunching your numbers, remember that you’ll have to pay the obvious expenses like your mortgage, taxes, and insurance. There are other costs to San Francisco investment homes as well, such as:
- Vacancy costs
- Routine and preventative
maintenance
costs
- Marketing and
tenant screening
costs
- HOA and association fees
- San Francisco property management costs
Once you know what you want to spend when you’re buying a San Francisco investment, you can decide which neighborhoods fit your budget. It will narrow down your options and provide you with strategic opportunities.
Think about San Francisco Tenant Trends
Tenants in San Francisco range from highly paid entrepreneurs to service workers and students. When you’re choosing the neighborhood to invest in, make sure you’re thinking about your likely tenants. Many investors make the mistake of looking for homes that they’d like to live in themselves. Unless you’re targeting high-end tenants and rental values, you probably don’t need granite counters, marble floors, and custom wine cellars in the property you purchase.
Good tenants will want well-maintained homes in desirable locations. Choose a neighborhood that has good schools, easy access to public transportation or commuter routes, and proximity to things like stores, shops, groceries, restaurants, and recreation. Those are the things your average tenants will want.
Check Association Rules
Before you buy a unit in a building, make sure you understand the
association rules
and regulations. There may be rules about pets, extra fees, and high association dues that will have to be factored into your decision. Choosing the building that you buy in will often be just as important as the neighborhood in which it’s located.
Work with a San Francisco Property Management Company
