I am thinking to buy something in San Jose

around the downtown area...I'm thinking to buy something close to the schools.

What do you think about the commerical real estate in San Jose now? Do you have some suggestions/Advices for a novice investor?
I am also open to other investing options...
Thank you very much.
In Buying Property - Asked by Kakit T. - Jul 23, 2009
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Davide P.
Pinole, CA

For advice/suggestions you should focus on a few different aspects. First, what TYPE of property are you open to (industrial, office, apartment, etc). Secondly, figure out what return you desire. This is VERY important because it's easy to get greedy and pass up a good deal even though it fits what you want. Thirdly, make sure you are qualified with funds. It takes a good 25-30% down at LEAST to purchase a commercial property.
I don't personally know too much about San Jose, but I always recommend calling 2-3 agents to meet with them. See who is the most knowledgeable and who you have the most chemistry with. If you happen to be interested in Alameda/Contra Costa/SF counties, I'd be more than happy. You can find a CCIM with the link below. Good luck!

Jul 23, 2009
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Paul S.
Glendora, CA

In a down market multifamily usually takes less of a hit because people always need a place to live. Commercial requires some sort of business to need space and therefore when the economy is down the demand for space decreases. If you are starting out look a multi-family 1-4 units. Be careful where you buy. A good location is always something you want to look for. According to research that was published at the beginning of 2009, San Jose had a very low vacancy rate for multi-family (3.34%). According to that same research from 2005-2008 prices rose 23% and are projected to go down 5% 2009-2010 (Keep in mind this projection was at the beginning of this year. It is probably different). If you stick to 1-4 units you will be able to get into the investing game with the smallest down possible. Most commercial deals require 35% down. You will be able to finance 1-4 with far less. In addition if after your down there is a negative (maybe you recognize an upside in the future), if you yourself can qualify for the negative you should still be able to get the loan? Commercial loans will require either a 1.25 (or more) debt coverage ratio (DCR) or 35% down, whichever is greater. Negative cash flow will not be allowed even temporarily. DCR simply means for every dollar you pay out in debt you must receive (in this case) $1.25 in income after expenses. 1.00 is break even and anything under 1.00 is a negative. As you can see the 1.25 requirement will not allow you to buy something that starts out negative even if there is a big upside down the road. If you wold like more info you may contact me at pstoski@yahoo.com or 800 554-7362 ext. 208
Paul Sylvester, CCIM

Jul 24, 2009
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