• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Catherine Gacad

  • About
  • Categories
    • Archives
    • Blogging
    • Burning Man
    • City Guides
    • Education & Politics
    • Favorite Books
    • Finances & Retirement
    • Parenthood
    • Relationships
    • Religion
    • San Francisco Bay Area
    • Travel
  • Hire Me
  • Subscribe
    • Feedburner
    • Bloglovin
    • Feedly
  • Search

All Posts, Finances & Retirement, San Francisco Bay Area

Real Estate Investing 101

I couldn’t sleep last night. I’m a light sleeper to begin with, more like a nervous sleeper as I’m always thinking about the stress in my life. And recent developments could seriously alter our future.

We are on the hunt for a new home. Yes, on top of everything going on with our current property, with checks to contractors being written in the tens of thousands of dollars. It would make your head spin. Piddly amounts like $400 to test mold and air quality and $750 for plumbing don’t phase me anymore because I’m used to seeing stratospheric invoices for the contract work and legal fees. We are in the midst of the spring selling season and Dean and I are determined to buy a more suitable home for our family.

A few weeks ago, we were prepared to submit an offer for this Victorian in Alameda listed for $895k.

We were willing to go as high as $1.2 million, but were told not to bother. I found out today that it sold for $1.45 million.

I’m not a real estate expert, but I do know a thing or two about economics and at that price point, the economics don’t work.

Buying a home is one of the most important financial decisions you will make. It’s right up there with choosing a school and financing your education, finding a job and negotiating your compensation, and selecting your spouse (who can be either an asset or a liability). I think most people think of the wrong things when they are purchasing a home. Does it get enough light? Does it have a nice backyard? Is there enough closet space? Can I see our family living here for a long duration?

To me, it’s primarily about the economics…because when it comes down to it, you are investing your hard-earned dollars and it better make financial sense. Here’s my idiot-proof guide to buying a home.

1. How fast will it appreciate?

2. Worst case scenario, if you were to lose your job and could not afford the mortgage anymore, could you: A) immediately rent the property for more than the mortgage or B) put it on the market and breakeven or make a profit.

Those are the questions you should be asking.

I hear so many stories of people who lost money in real estate and I’m thinking, what were they doing buying property in Podunk, CA? How many venture-funded companies are in Podunk, CA? Why would anyone want to live in Podunk, CA?

Whereas other areas like Silicon Valley or high-growth neighborhoods…those make sense.

This is our current home, a humble 2-unit property in San Francisco.

It’s adjacent to a very busy and noisy street. Few people were at the open houses. There was no bidding war for the property. We paid $915k. We rent out the top unit which is a 2 bedroom, 1 bath, while we live in the bottom unit which is a 2 bedroom, 2 bath. From Day 1, the economics worked tremendously.

Not only that, one year later, it is currently valued at $1.5 million and climbing since 2 bedroom, 1 bath homes in our neighborhood are being listed at $1.5 million. The point is, you want to buy where there is demand and that demand will continue: metropolitan areas, hot suburbs easily commutable to jobs, cities with good school districts, up and coming neighborhoods.

We submitted an offer yesterday for this 2-unit property in Alameda listed for $958k. We offered $1.2 million and apparently are in the running so we shall see. I’m really nervous about moving out of San Francisco (which would also mean a bit of a longer commute since I work in the city), but this property is only 3 blocks away from my parents and where I grew up. Plus my parents help care for Franco so this would make it easier on them.

Related

Tweet
Pin
Share10
10 Shares

04.16.15

Tweet
Pin
Share10
10 Shares

Reader Interactions

Comments

  1. janine Huldie

    April 16, 2015 at 1:34 pm

    Aw, I wish you tons of luck with this current offer and being close to your parents should be a good move though for help with Franco, as I thank god that we have my parents so close to help us with our girls, too.

    Reply
  2. Cece @Mahogany Drive

    April 16, 2015 at 1:39 pm

    You are insane!! House hunting again on top of renovations? Well, it looks like your first purchase has paid off so it sounds like you know what you are doing. I will say that not everyone can afford to buy a house in those desirable in demand areas. At least not one that’s livable, without some serious renovations which may or may not be in the budget. For a lot of people including us we had to make a choice between house and location. We chose house because looking at what we could get in pricier areas was just depressing. We are definitely not in podunk, CA and our house has appreciated but probably not like if we had bought in one of the hot spots.

    Reply
  3. CK

    April 16, 2015 at 2:02 pm

    Those are some really beautiful houses. Hope you get the one you want.

    Reply
  4. Mo at Mocadeaux

    April 16, 2015 at 8:49 pm

    I’m impressed with how rational you are through this process. I am a terrible home buyer because I let my emotions and sentimentality over take my thinking! I agree about buying in an area that holds or, better yet, increases its value. But I don’t understand a market in which an offer of $242K over the asking price is just “in the running”. Crikey!!! Good luck!

    Reply
  5. AwesomelyOZ

    April 17, 2015 at 6:11 am

    Omg those properties are GORGEOUS!! That’s quite a high price point but that’s similar to what homes here in Northern Virginia would equate to unless you live out in the Boondocks. I haven’t started thinking about home buying yet as I’m still working towards other financial matters but I will definitely keep these things in mind when the time comes. Have a great one Catherine and best of luck on your home bidding! Hope you guys get that home, it’s stunning!! Take Care -Iva

    Reply
  6. Tamara

    April 17, 2015 at 10:20 pm

    Boy I had forgotten about those northern CA price points. Although I’m from NJ/NY so it wasn’t that earth shattering.
    I understand about the stress late at night. Wishing you a lot of peaceful dreams and happy house hunting.

    Reply
  7. Dana

    April 18, 2015 at 6:35 am

    Fingers crossed for you, Catherine! My good friend and next door neighbor is moving to Los Gatos on Tuesday. We live in a great neighborhood with a vibrant housing market, but even so they are going to have to fork over so much more in California. Their current home would sell for five times the price in CA, so obviously they need to modify their expectations.

    Reply
  8. Melissa Anderson

    April 19, 2015 at 3:47 pm

    Hi Catherine! I’m so sorry to hear about all the crap your going through with the house AND with a new baby! Can’t wait to hear if you guys get the house close to your parents. It is absolutely gorgeous! Thanks for sharing your financial wisdom in your posts. For someone who tends to keep their head in the clouds, I need that dose of reality.

    Reply
  9. Roaen

    April 20, 2015 at 11:15 am

    Best of luck with the offer and eventual move! I have friends that grew up in Alameda that really loved the area.. and one of my friends from college even commuted from Alameda to SF, so fear not. 🙂

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Welcome to my site, derived from an advice column I wrote while getting my MBA. I live in the San Francisco Bay Area. I give helpful, opinionated advice based on my own experience and from the expertise of my extensive network. For more, click here.

Categories

  • Archives
  • Blogging
  • Burning Man
  • City Guides
  • Education & Politics
  • Favorite Books
  • Finances & Retirement
  • Parenthood
  • Relationships
  • Religion
  • San Francisco Bay Area
  • Travel

Popular Posts

  • An Exploration of World Religions: Zoroastrianism
  • A Flowchart for Choosing Your Religion
  • Why Do Guys Date Girls Who Barely Speak English?
  • Touring Sunnylands, "Camp David of the West," near Palm Springs
  • UC Berkeley English Department
  • How to Avoid Fecal Coliform Bacteria on Your Next Flight
  • What to Know About the Lair of the Golden Bear
  • Daily Interviews
  • Pre-Thanksgiving Not So Good News
  • Oysters at Cafe des Amis

Back to top

© 2025 Catherine Gacad.