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Home/ Blog / Investing / The Best Neighborhoods to Have an Investment Property in San Francisco

The Best Neighborhoods to Have an Investment Property in San Francisco

by | 0 comments | May 18, 2017 | 3 min read |

The Golden City – one of the most in-demand real estate markets in the US and a leading Real Estate Superstar City.

This post was written by our partners at Mashvisor, whom are making it easier for investors to find and analyze new real estate investments.

Why Invest in San Francisco?

San Francisco is by far one of the nation’s most profitable real estate markets.

The catch? Expensive is an understatement. Currently, home prices in San Francisco are peaking at record highs. This can come as either a challenge or an opportunity. A savvy investor can allocate their resources to optimize their San Francisco investments. So if you do have the financial ability, definitely consider investing in San Francisco real estate! The city is optimal for both traditional as well as Airbnb investments.

It’s important to highlight the fact that if you’re considering San Francisco investment properties, you have to be in it for the long run. San Francisco real estate is not an instant cash flow achieving market. BUT, what is great about San Francisco is the fact that its homes have always held up their value during economic downturns.

Check out some of Mashvisor’s data on San Francisco:

  • Average Median Property Sale Price: $1,686,427
  • Average Airbnb Cash on Cash Return: 1.15%
  • Average Traditional Cash on Cash Return: 1.74%
  • Average Airbnb Rental Income/mo: $3,309
  • Average Traditional Rental Income/mo: $5,119
  • Average Airbnb Cap Rate: 1.15%
  • Average Traditional Cap Rate: 1.74%

Top Neighborhoods to Invest In

interior of san francisco home

Potrero Hill

Potrero Hill is located on the eastern side of the city. The neighborhood’s classified for having its own unique character that’s somehow distinct from that of the city’s. It has kept its own quite pace despite being surrounded by other busy neighborhoods. The neighborhoods residents are mainly upper middle-class families. And while primarily a residential neighborhood, Potrero Hill is most ideal for Airbnb investments. Check out the numbers below:

  • Median Home Price: $1,098,500
  • Airbnb Occupancy Rate: 61.40%
  • CoC Return
    • Airbnb: 5.36%
    • Traditional: 2.63%
  • Average Rental Income/month
    • Airbnb: $7,363
    • Traditional: $4,703
  • Cap rate
    • Airbnb: 5.36%
    • Traditional: 2.63%

photo of palace of fine arts san francisco

Pacific Heights

Pacific Heights is one of San Francisco’s most popular neighborhoods. It offers views of the city’s most famous attractions such as the San Francisco Bay, the Golden Gate Bridge, Alcatraz, and the Palace of Fine Arts. It is thus one of San Francisco’s most popular Airbnb neighborhoods. And while it’s always populated by tourists and locals alike, the area maintains its quiet residential feel.

  • Median Home Price: $1,995,000
  • Airbnb Occupancy Rate: 49.69%
  • CoC Return
    • Airbnb: 2.03%
    • Traditional: 1.67%
  • Average Rental Income/month
    • Airbnb: $7,469
    • Traditional: $6,832
  • Cap rate
    • Airbnb: 2.03%
    • Traditional: 1.67%

photo of south of the market san francisco

South of Market (SoMa)

South of Market, located just south of Market Street (hence, the name) is a large residential neighborhood in San Francisco. SoMa includes several sub-neighborhoods including South Beach, Mission Bay and Rincon Hill. The neighborhood’s got a little bit of everything including hip and trendy nightspots, art spaces, and business districts. And while the area is not the most developed in San Francisco, it has seen some construction efforts in the past few years. As one can infer from the data below, SoMa is an ideal traditional investment.

  • Median Home Price: $1,900,000
  • Airbnb Occupancy Rate: 51.91%
  • CoC Return
    • Airbnb: 1.7%
    • Traditional: 1.83%
  • Average Rental Income/month
    • Airbnb: $3,466
    • Traditional: $4,797
  • Cap rate
    • Airbnb: 1.7%
    • Traditional: 1.83%

lounge area of merced manor san francisco

Merced Manor

Merced Manor (also known as Parkside) is yet another residential neighborhood of San Francisco’s. The neighborhood known to be safe and family friendly. Merced Manor is also identified by its excellent transit system within, and in connection to downtown San Francisco. This is one of many factors why it’s a very attractive neighborhood to both locals as well as tourists. In a nutshell, Merced Manor is a great Airbnb as it is for traditional investments.

  • Median Home Price: $1,888,888
  • Airbnb Occupancy Rate: 54.59%
  • CoC Return
    • Airbnb: 1.69%
    • Traditional: 1.76%
  • Average Rental Income/month
    • Airbnb: $5,855
    • Traditional: $5,980
  • Cap rate
    • Airbnb: 1.69%
    • Traditional: 1.76%

All in all, if you have the financial ability, definitely consider investing in San Francisco real estate. While a challenging investment, San Francisco is among the most profitable in the nation. And remember, to gain more insights on property analytics in San Francisco and other cities nationwide, make sure to use Mashvisor to optimize your search and make smart investment choices.

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About the Author
This blog was written by Mashvisor, who are making it easier for investors to find and analyze investment properties by providing real estate analytics.

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