Home investor market heating up as perceived value improves

In the last week I have been hearing from other agents and people I meet at open houses that the demand for rentals is going up.  A couple weekends ago there was a home in East San Jose that had 50 offers on it, and other “A location” homes on the East side are seeing similar responses.  Investors there realize they can be cash flow positive on day one with a modest down payment.

In the middle-markets of Santa Clara County, I’ve met several people who are buying one or more rentals in the 500-700k range and are doing minimal cosmetic repairs and renting them out instantly with multiple interest.  I recently tried to place a friend in a rental in Cambpell, and there were 3 other applications in.  The place was a modest 3/2 home on a corner lot of a pretty street (mediocre schools), and they got $2300 (renter paid utilities) for it.  All applicants were very well-paid high tech families.

In the higher end markets (Los Gatos, Cupertino, Los Altos, Saratoga, Almaden Valley), I’ve recently met a couple families who are looking to buy homes in the 1 million to 1.5million range using heftier down payments so they can get into a conforming loan ($729k or lower).  One of the families had sold a property a couple years ago and have been sitting on the money (smart AND lucky!).  Rather than put it into the volatile stock market, they are planning to buy a home in an upscale neighborhood with the most desirable schools now, while inventory is still high and demand is only starting to recover.

Interesting times!