There are two elements to any investment property: The first is appreciation and the second is income (ROI-Return on investment). Both have different distribution stream, One is the appreciated value you receive at the time you sell your investment property and the other is a monthly income and together they are building your investment value.

When you selecting a property for appreciation look at the history of last 20 years. See if you are at the top of the market or at the bottom. How did the property appreciated during the last 20 years.
Now when you are looking on the ROI look at the home value vs income potential around the neighborhood and find out the rental income of the SFH.
Calculation is :
ROI = (Yearly rental income – Yearly rental Expanses) / (House purchase price or House value)
If your ROI is 4-5% this is a good ROI in the bay area.

Regarding location there are a lot of housing that have good ROI like Sunnyvale between Central Expy and Hwy 101, San Jose Near Berryessa or Near downtown and Milipitas
Let me know what you think,
Paz

Hi,
what rate of return on your investment do you require, how much negative cash-flow can you support, etc.? Give me a call to discuss. Good luck

Buyer 50%-60% Cash Rebate / Seller 50% Commission Discount
Quality Full Service! Work directly with the Broker.

Flavio Tejada, Owner/Broker, Realtor, MBA-Finance
(415)305-2958

It depends on what your long range goal are? This involves a long conversation with exchange of questions.

Such as your budget, rate of return, expected rent, are you handy to make repairs, to name a few.

When I may be of further help you can contact me.

The best place to buy for rental is where the most of the renters are. Problem is with the purchase price and financial burden (if you finance the purchase). I'm sending you a good link to use the real numbers:
http://www.goodmortgage.com/Calculators/Investment_Property.html
Large cities, places around educational facilities, etc. are historically good. However homes could be expensive here (as in your area). Also please keep in mind the rent control issue. Satellite cities, such as Daly City, Pacifica, etc. are OK and home prices are lower. Also keep in mind the rent control issue.

Homebuyer,
If you are new to investing you will want to work with a seasoned Realtor. Their experience should help you through this transaction. Along with location remember to consider the following factors when making your decision Risk, Appreciation, Liquidity, Marketability, Management, Leverage, and Taxation.

I think Santa Teresa in San Jose is way under-rated. If I can help you, I live and work here.