Buying Smart in Redwood City
With prices practically doubling in Redwood City over the last few years, some are starting to wonder if they might be paying too much for a house. In the third quarter of this year, we saw the market slow down a bit, but no one really knows what the future holds. Whether the market stabilizes, prices continue to rise, or they drop, it’s good to plan ahead by buying a property that is likely to increase in value, or retain its value. Looking for homes that have room for improvement, potential for expansion, or would make a decent rental property, if need be, can never hurt, and is certainly better than buying a money pit.
Where to Look
In my opinion, properties in Redwood City that are more likely to hold their value are those that are within walking distance to downtown, have convenient access to commute paths, or are part of Redwood City’s higher ranking schools. Here are a few areas I recommend starting your search:
High School Acres is within walking distance to all the action downtown and is characterized by older homes with plenty of charm.
Lenolt is very close to downtown and the train station and is an up and coming neighborhood where you can still find some real estate deals.
Central Park, specifically Woodside Plaza, is very family friendly, flat for walking, and is home to one of Redwood City’s highest ranking elementary schools, Henry Ford.
The southwest portion of Horgan Ranch, which borders Atherton, offers a quick and easy commute to Menlo Park and Palo Alto via Alameda de Las Pulgas, Highway 280, and El Camino Real. It’s also a stone's throw from multi-million dollar properties in Atherton.
Buying with Potential for Expansion
Buying a property with potential for expansion is usually a smart investment. While High School Acres and other sought after areas of RWC will sell for $1,000 per square foot, it's still possible to build a new home or add on to an existing home for around $300+/- per square foot. In other words, you can buy an 1,800sf home for $1.8M. Or you could buy a 1,200sf home for $1.2M, add 600sf of living space and be into it for less than $1.8M. If prices were to drop by 10% and you needed to sell, you would probably still profit or at least break even buying the $1.2 property that you added on versus buying the $1.8M property.
Buying a Potential Rental Property
In the event that you have to move, whether it be for a job or you need more space, or because of other circumstances, it's good to have the option to rent your property, and that’s even better if the rent covers your mortgage. Things that are attractive to renters: at least one and a half bathrooms (or the space to add a 1/2 bath within the existing structure), a garage for storage space and that might double as an in home office/studio space, walking distance to shops and restaurants, and close to freeways.
Avoiding Money Pits
Buying a property with liabilities like a pool, retaining walls, and decks could cost you thousands, if not hundreds of thousands of dollars. While having a pool can be nice, it comes with constant maintenance. Hiring a pool guy, replacing parts/components of the pool that break or age, and keeping the pool full is expensive. Retaining walls, if properly engineered, can last 20+ years but once they stop retaining you can be sure it will be a major expense to reconstruct. It's not uncommon for the cost of retaining walls to exceed $80k in more hilly parts of Redwood City.