by Ken Ott, Real Estate Investor, Shark Fin
I recently checked out a single family home for sale at 1618 Spring Street, Mountain View.
It’s listed at 1.45M. After running comps, I’ve arrived at a number of 1.1-1.2 for purchasing the house, 1.25 max. Then, after repairing this dusty, musty, moldy, rusty home, it would resell for at least 1.4M but definitely not for more than 1.5M in 2019. There’s not really enough margin in it for an investor, even at 1.2.
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Why not more than 1.5M? It’s butted up against Highway 101: 12 lanes of freeway noise pollution and vehicle exhaust at that location. It’s also a small house and lot size. But hey- one person’s junk is another person’s treasure right?
Why would this house sell for anywhere over a million dollars? Homes in Mountain View, California sell for this much. You can verify this on Zillow, Redfin, or any other website. Why?
The usual suspects: proximity and “short” commute to Silicon Valley: Facebook, Google, LinkedIn, Microsoft, Apple, Stanford. (Even close in, unless you’re bicycling, the traffic adds up around here. Beats shuttling to/from SF, Oakland, or Santa Cruz daily though.)
Other reasons: great schools, every other house in the area costs as much or more, proximity to Palo Alto and Whole Foods, two 24 Hour Fitness gyms in the same strip mall; location on the Redwood and Fog hugging Peninsula; tree lined streets. But mainly: that short commute to and from work — time is money! I’d move here too if I worked at Google. (Not if I were at FB though – too much Googler traffic to slog through in the mornings.) It’s much closer to the main Googleplex than the new Googleville housing Google claims they’ll start building in the year 2020, too.
So here we are. 1618 Spring Street is still freshly on the market. You are free to put down as much or little coin as you want for the place, but for a real estate investor like me, I’d limit my offer to 1.1-1.2M. If you plan to raise your children and grandchildren there, you could pay more because you’re not buying the house to earn a living, but rather to live in it. There’s a significant psychological benefit from a shorter commute, plus Mountain View living and relatively easy access to great peninsula hiking and the ocean. (Versus commuting by train and bus from Lathrop or driving 3 hours one way from Tracy.)
What would you pay?