San Jose is a booming metropolis bordered by the rolling hills of the tech hub of Silicon Valley. This California city resides in Santa Clara County, one of the nation’s wealthiest counties. This supply of wealth and a limited supply of homes has driven home prices up over the past few decades.
The median home sale price in San Jose was $1,300,000 as of October 2021, representing a year-over-year growth of 11.6%. San Jose looks very attractive to real estate investors compared to the national median home sale price of $374,000. Here are five real estate investment tips for real estate investors looking to jump into the hot San Jose market.
1. Know Your Numbers Before Making Offers
Know how much you can spend on down payments, closing costs, and renovations, and then stick to those numbers. While this may seem obvious, too often, someone will bite off slightly more than they can chew and then get called on it. Stretching yourself thin financially may be tempting for the opportunity for a bigger payout, but if you hit a snag, the costs will be that much higher. Instead, know your numbers and make them a hard and fast rule. Don’t worry about “leaving money on the table,” it’s much better to have a more certain return on your investment than a gamble.
2. Make an Offer 24 Hours Before the Offer Period Ends
Many real estate investors and homebuyers will submit their offers in the final hours. However, you can set yourself apart from the rest of the crowd by submitting an earlier offer. While the seller will still review the other offers before making a decision, it provides your offer with primacy. Use this to your advantage and get those offers in quickly so you know the seller is reviewing your offer by itself, rather than on a stack of others.
3. Make Your Offer Clear
Do you plan on covering the closing costs? Up to how much? Will you offer a rent-back agreement? However, if you plan to sweeten the pot for home sellers, be clear and upfront about it. This way, the seller can adequately measure your offer against others.
4. Make a Competitive Offer
This tip may also seem obvious, but like in the above paragraph, there are many ways to sweeten the deal without simply adding to the final sale price number. A rent-back agreement may be ideal for home sellers who are also primary residents while they’re still vying for a new home for themselves. Additionally, consider the other headaches and struggles home sellers have and how you can shoulder those burdens yourself. Make it as easy as possible for them to sell to you and you’ll have a much better chance at winning the bid without necessarily having to shell out more cash.
5. Consider Other Types of Real Estate
Single-family homes are abundant and straightforward but don’t limit yourself to single-plexes and duplexes. Condos are an increasingly popular type of home choice for younger millennials due to their ease of care and lower average price. Ironically, this collective desire is increasing the prices for condos. In San Jose, condos are available and still command a hefty sale price (median for October 2021 is $732,000) with stable growth (up 14% year-over-year).
San Jose is a fantastic market for real estate investors seeking to purchase more expensive properties without adding more complexity through greater volume. A single San Jose property can be purchased for three properties that fall below the national average compared to the national average.
However, only having to deal with one property instead of three (including closing and renovation costs) is much better.
Are you interested in investing in San Jose real estate? Contact us at Park Place Finance to get started with a hard money loan to finance your next investment.