San Francisco Still has a hot rental market!!
I just signed a one year lease for my 3-bedroom rental at $3000/mo including a garage!
The rent is finally back to the previous high when the last rental peak occurred during the dot.com heyday. It took some time to rent (about 3 weeks), since I started out high at $3400/mo and made a couple of reductions.
It’s a balancing act of getting top market rent and a top applicant within a reasonable period of time. Since there’s no hard science to setting market rents, it’s easier to start out on the high side & get a sense of interest and make a reduction after a couple of showings if needed.
Due to S.F. rent control, you have one chance to get top market rate for a rental. Once that unit becomes occupied & if it stays occupied for several years, it’s typical to have your building expenses rise at a much quicker pace than the minute allowable S.F. rent increases which don’t keep up with inflation or building expenses.
Our 3-bedroom has always been the challenging unit to rent in my 10+ years of owning this multi-unit building. It typically draws the roommate crowd which can bring inherent management challenges if the roommates aren’t the right mix. It also doesn’t have a second bathroom which is a negative for many. We’ve even considered splitting the unit into two smaller units.
Based on prior experience, the ideal rentals to have are 1 to 2 bedroom units. They typically bring in a higher price per square foot & there are more renters who can afford a 1-2 bedroom vs. a pricier 3-bedroom. Since there is greater demand, these units tend to rent very quickly, even in a normal rental market.
My 1-bedrooms have almost always moved fairly quickly (within a week of hitting Craigslist) in my history of owning this property.
I also recently rented a 1 bedroom for a client at $2000/mo with no parking included. There was solid interest with about 10 groups through at the first showing.
I failed to mention that both rentals are pet-friendly which tends to bring in more applicants since our S.F. pet friendly inventory is so low. I’ll go into more detail in a future post about marketing to renters with pets. This is a great niche market you may want to consider if you’re having trouble moving a rental. There are specific guidelines to follow to ensure a successful residency with tenant’s who own pets. I’m happy to share my systems if interested.
In addition to a strong rental market & being pet friendly, location of the rental property is also key. These properties are on the Glen Park border, a neighborhood with excellent restaurants, close proximity to freeways 101/280, close in to City College of S.F. & S.F. State, walking distance to Glen Park BART, and just a few minutes south of Noe Valley. This neighborhood is in demand and a slightly less expensive Noe Valley alternative.
If you’re considering investing in S.F. rental property, I’m happy to be a resource. Even with the challenges associated with rent control, there are great opportunities with our rental properties.
S.F. has a steady draw. In my 10+ years of renting my units, I’ve seen a steady influx of people relocating from other parts of the country. I’ve also noticed a tremendous number of techies who want to live in S.F. even though they have to make the long commute to Silicon Valley. S.F. is a world class city & consistently is in demand!!
Until next time!