Intero Real Estate Services
Sophia Delacotte
Realtor in San Jose
 


How to Buy or Sell an Investment Property
in Silicon Valley


Helpful Tips for Real Estate Investors in Silicon Valley





Here are a few essential tips from a San Jose Realtor that you should keep in mind as a potential investor in Silicon Valley's real estate market.


Define The End Purpose of Your
Real Estate Investment

The main reasons why investors prefer to buy real estate rather than stocks are the following:
 
  • Appreciation (hoping that the real estate market will go up)
  • Cash flow (rents to be paid over time)
  • Tax breaks (depreciation)
  • Amortization (mortgage pay-off)

Can you really cumulate those four factors at the same time? Probably not for a few obvious reasons.

For instance, you will not have the same tax relief if you buy cash or if you borrow money. The price at which you buy a property is dependent on the overall health of the real estate market, i.e. you will pay more in a seller’s market (with low housing inventory) than in a buyer’s market where is housing supply abounds. To take another example, the rental market is greatly impacted by interest rates levels, i.e. when rates are high, renting is a better option.

Therefore, as an investor wishing to take advantage of the lower prices of Silicon Valley real estate today, your first challenge will be to define precisely for which one(s) of the four reasons described above you are interested to invest in real estate.

If you already owe properties, your challenge will be to decide whether to keep or sell depending on market conditions. If you opt to sell, timing is everything in order get to get the best ROI (return on investment). If you decide to keep your properties, renting it out or using it for your own needs are the two available options. In both cases, you should be prepared for potential renovation/rehab or upgrade costs to keep up with the latest housing standards as well as real estate market trends.

Your end strategy will determine how much time and money you should be ready to invest in your real estate portfolio.


Take Time To Understand
The Local Real Estate Market

Before anything, bear in mind the main expenses related to ownership, which can vary greatly from one real estate market to another, even in Silicon Valley: mortgage rates, property tax, insurance, HOA fees, property management, maintenance, utilities, repairs, turnover (lost rent, clean up, etc).

Above all, take the time to study and compare current market prices and transactions history with the help of a Realtor very familiar with the Silicon Valley area you are interested in. Leverage local Bay Area resources as much as possible and spend time in the target area with your Real Estate Agent to form your own opinion.

While most real estate agents will tell you that location always remains the critical factor, there are other soft factors worth considering such as crime rate, hazards risks such as fire (most common in California) or flooding as well as attractiveness of the area to potential buyers or tenants such as school ratings.


Buy From An Investor’s Perspective

When shopping in any real estate market as an investor, you can either look for quality homes or snap houses on the low end of the market.

There is no golden rule, just a few common sense tips. Unless you plan to use the property you are purchasing for your own needs somewhere along the way, you should understand the potential long-term ROI when looking to buy homes on the high end of the Silicon Valley real estate market. Luxury homes are always in demand in Silicon Valley, but depending on "tech bubbles", supply and demand for luxury homes can vary greatly from one year to another.

If possible, try as much as possible to identify and invest in low to mid-priced properties. Remember the old maxim: buy low, sell high.
 
Cheaper and inhospitable homes might turn you off first as a home owner but should inspire you as an investor. Cheap neighborhoods might turn into upcoming areas in the next few years. Ask your Silicon Valley Realtor to look for fixer-upper (aka TLC) houses or starter homes that will require varying levels of restoration and/or renovation.


Make An Offer Based on Market Trends

In a buyers' market you can consider making an offer below the asking price depending on the comparables in the area.  In a sellers’ market you most likely will have to bid over asking price. How much more over asking price will depend on the desirability of the property and number of competitors

At the end of the day,
it is always your choice that should prevail, not just the advice from your Realtor, no matter how reputable and knowledgeable he or she can be.

As I always say to my customers, I am here to give you the tools to make the right decision but you are the ultimate decision-maker.


                                      Know the Key Anti-Flipping Rules

First and foremost, remember that it is not illegal to buy and flip a short sale property as long as you disclose in the purchase contract that you intend to rehab the home and resell it for a profit.

Here are some of the key legislation you should be aware regarding house flipping today.

1. Anti-Flipping Disclosures

Nowadays, addenda to the contract such as Anti Flip Affidavits and Arms' Length Transaction disclosures must systematically be signed by the buyer of a short sale property.

All of these documents state that you, as the buyer who intends to flip a property, will not be allowed by the lender(s) to resell the property for a given period of time, usually anywhere from 30 to 90 days.


2. Fannie Mae & Freddie Mac Title Transfer Requirements


Since January 18, 2013, the following guidelines apply to all Fannie Mae and Freddie Mac short sales with or without an offer:

  • The buyer is prohibited from selling the property for any sales price for a period of 30 days from the date of the deed.
  • After a 30 day period, and until 90 days from the date of the deed, the buyer is further prohibited from selling the property for a sales price greater than 120% of the short sale price.


3. HUD moratorium on FHA 90-days Anti-Flipping Rules

In November 2012, the Federal Housing Authority (FHA) announced that they would maintain and extend until 31 December 2014 their moratorium regarding their “90-Day Anti Flipping” rule for all FHA insured loans.
 
The waiver was instituted to encourage speculators to enter the housing market and provide cash for turnover of properties during the foreclosure epidemic. The waiver allows speculators to sell properties to home buyers who are purchasing with FHA-insured mortgages.
 
On December 10, 2014, the Federal Housing Administration (FHA) announced that it will not extend the temporary waiver of FHA’s regulation that prohibits the use of FHA financing to purchase single family properties that are being resold within 90 days of the previous acquisition.
 
As a consequence, speculators will now be required to wait at least 90 days from their purchase before they may sell to home buyers who are purchasing with FHA insured mortgages.



1031 Exchange for Real Estate Investors

The Tax Deferred Exchange, as defined in Section 1031 of the Internal Revenue Code, aka as the "1031 Exchange" offers real estate investors an opportunity to legally build wealth and save on taxes.

By completing an exchange, any Real Estate investor (aka as the Exchanger) can dispose of their investment property, use all of the equity to acquire a replacement investment property of equal or greater value, defer the capital gain and depreciation recapture taxes that would ordinarily be paid, and leverage all of their equity into the replacement property.

Two requirements must be met to defer the capital gain tax:

  • The Exchanger must acquire a “like kind” replacement property and
  • The Exchanger cannot receive cash or other benefits (unless the Exchanger pays capital gain taxes on this money).


What Properties Qualify as “Like-Kind”?

"Like-Kind" is the most misunderstood word in 1031 Exchanges.

In essence, all real estate is like-kind with all other real estate.  As long as both properties are used for investment purposes or in the productive use in trade or business, any kind of real estate can be exchanged for any other.

Also, the property can be anywhere in the United States. Selling in California to buy in Hawaii or Texas is fine, but you can’t buy in Mexico or Canada.

Here are a few examples of acceptable "Like-Kind" exchanges:

  • A rental house to an apartment building
  • A rental condo to a shopping center
  • An industrial building to a farm
  • 4 rental houses to buy a retail mall
  • A four-plex to 10 rental houses

  • NB: In the last 2 examples, selling one property to buy multiple is OK

Also, bare land can be considered to be held for appreciation. So even though it may not be producing income like a rental property, it is still investment real estate and can be exchanged for rental homes, commercial property, etc.

Now, what kind of real estate does not qualify? Primary residences, secondary residences, property purchased for resale (i.e. “flips”) and property held for development are generally not considered to be investment real estate.

Finally, note that a 1031 Exchange will also defer the 3.8% Healthcare Tax (effective since January 1, 2013) which is based on adjusted gross income (AGI) thresholds.

Remember that the AGI includes the capital gain from the sale of your real estate. So even if your income level is below the thresholds, the capital gain from the sale of your property could push you into the higher brackets.



What my clients are saying  

Sophia has been my agent twice, one time to sell and the other to buy. Thanks to her skills and experience, she was able to help us through each step of the process and get us great deals. I particularly appreciated her proactive attitude to get things done, and her amazing attention to details to make sure nothing slipped through the cracks. Each time we also got praise from the other parties about her professionalism.

 

~ Julien R.

Sophia has gone above and beyond in regards to helping my wife and I find a new home for our expanding family. She is very informative in all aspects of buying a home! I highly recommend her!

 

~ Josh M.

Sophia Delacotte is an outstanding real estate professional. She brings great understanding of her clients' needs, diligence, and taste. I highly recommend Sophia for any endeavor within her scope of expertise.

 

~ Michel R.

Working with Sophia was a great experience. She is not only a trustworthy person, but she also always had my best interest in mind. She showed me various condos and explained the pros and cons of all properties which made my decision to choose the right condo easier. She constantly followed up with all the parties involved to make sure the home buying process went smoothly. This is evidenced by the fact that we closed right on time! She even made sure all the repairs were completed to my condo before I moved in. I would recommend Sophia to anyone who wants a realtor that will fight for them every step of the way.

 

~ Sean M.

I worked with Sophia Delacotte several times of the last 18 months. She sold my home with suave and suggested some another great agents remotely for my relocation. There was: honest and frequent communication; clear expectations; and fairer than average rates from the start; no sandbagging; a watchful eye and excellent management of all aspects of the process and contracts. Other realtors in the last decade had really left me with a negative opinion of agents, but Sophia made a name for herself and removed my bias. I'm also glad for Sophia's eagle-eye for legal trouble, so when it came to here recommendations for covering ourselves, I followed them without hesitation. Suggestions on what needed fixed, and encouragement for transparent disclosures is important in California. Buying and/or selling a home can stressful, but it was fun with Sophia for myself and my family

 

~ Kyle B

Sophia Delacotte is thorough, knowledgeable, and helpful. She assisted me with the sale of my townhouse in San Jose. It sold after one open house, and I received multiple offers. Sophia screened all of the offers and recommended the offers which would close with the least amount of hassles or surprises. She is extremely knowledgeable about the real estate market. With her legal background, she is a strong and effective advocate for your side of the transaction. Sophia always kept me in the loop, was clear with what she needed, and the timing of the response to what she needed. She is a pleasure to work with, responsive, and committed to making the entire process go as smoothly as possible. I highly recommend Sophia and would definitely work with her again in the future.

 

~ Bonnie B.

Sophia has been very professional throughout the process of my house purchase. She was very patient as I was quite particular about what I want with the budget I have. Sophia was also very helpful and very knowledgeable. She is a very good realtor.

 

~ Jackson T.

When we met Sophia for the first time, on a Sunday afternoon, we were immediately struck by her professionalism and competence. With skill and patience, she navigated us through the complex and confusing steps of getting pre-approved for a loan, viewing the house, putting down an offer, and learning when to walk away. As first-time home owners, we were nervous and uncertain. Sophia gave us invaluable advice and encouragement during the ups and downs, and her knowledge of the real estate business and housing market always led us in the right direction. One of our favorite things about having her as our agent was that she made herself constantly available. She met with us every weekend for three months to check out houses we liked, and she was always savvy about the state of the house and what might appear on the disclosures. She struck the perfect balance between giving advice and allowing us to form an opinion ourselves.

 

~ Maria J.

Sophia was a dream to work with. She handled a very difficult short sale for my wife and I. Without her help we would have been lost. She was a great negotiator and partnered with us to help explain every piece of paper that we had to sign as well as assisting us gather proper documents an information all the parties needed. I can't recommend her more highly.

 

~ Nate M.

Sophia helped my wife and I during our house search this summer. She was incredibly diligent, honest and forthright. Unlike a typical agent she actually advised us against couple of houses due to issues she discovered in the disclosures (she reads every word). As first time buyers we were easily seduced by appearances but Sophia kept us grounded! Definitely look forward to working with her again and would definitely recommend her services to friends.

 

~ Sarang R.

Sophia has a sign in her office which reads "tenacity" which describes her commitment to her clients and her ability to follow through on a transaction. She's a great (full time!) agent to work with, and as a first time home buyer. I can't express how important it was to have her by our side to help us every step of the way. She's straight-forward (former lawyer), and french (former Parisian city girl), which only adds to her charm. Beyond her great work ethic, she conducts herself by the book with an uncommonly high degree of professionalism. Sophia will look out for your interests, and protect your privacy. While I'm happy to have a home (thanks Sophia!), my wife and I will miss having her as our agent.

 

~ Stephen R.

I am so thrilled that I chose Sophia Delacotte to handle the sale of my condo. Having had my first sale fall through two years ago at the fault of my realtor and title company, I was very nervous about going through the process again.Sophia’s confidence and ability was unwavering. She is very thorough and detailed, and her great follow-through skills assured me that nothing would slip by unnoticed.Everything went smoothly with the sale, even with my many unconventional secondary loans. Escrow closed on time, and I received my funds quickly. I would recommend Sophia to anyone buying or selling a home.

 

~ Radel S.

I was a first time home buyer in the US market, and Sophia has been fantastic helping me understand the whole process. I am so glad I hired her as my agent. She made every step go really smoothly and I have now found my dream house in the Bay area! She has been very responsive and quick to react when I needed offers to be put together. I strongly recommend Sophia for a Bay area acquisition, especially for non US citizens who are not familiar with local practices.

 

~ Sylvie B.

Sophia Delacotte is thorough, knowledgeable, and helpful. She assisted me with the sale of my condo. The condo sold after one open house, and I received multiple offers. Sophia screened all of the offers and recommended the offers which would close with the least amount of hassles or surprises. She is extremely knowledgeable about the real estate market. With her legal background, she is a strong and effective advocate for your side of the transaction. Sophia always kept me in the loop, was clear with what she needed, and the timing of the response to what she needed. She is a pleasure to work with, responsive, and committed to making the entire process go as smoothly as possible. I highly recommend Sophia and would definitely work with her again in the future.

 

~ Laurie O

I had to sell my house fairly quickly because of a move and imminent wedding. Sophia proved to be the best choice I could have made. She was extremely resourceful and guided me expertly through paperwork and expectations. The house sold after only two open houses, and we received multiple offers. I was also very satisfied with the price obtained. In addition, she made the whole process as painless as can be. Sophia provided very solid support, and her legal background was very helpful to navigate the documents required. I was glad she was on my side! I highly recommend Sophia Delacotte as your real estate agent.

 

~ Yves E.

It was wonderful having Sophia help my mother sell her house. She went above and beyond our expectations, and was very patient when addressing my mother’s concerns, making the process as smooth as possible. The house sold on the first open house, and we received multiple offers. Sophia screened all offers to make sure the one we chose would close without any surprises. I highly recommend Sophia to anyone needing a great realtor.

 

~ Phil R.

We used Sophia again this Spring as we had to move to reduce my commute. Sophia not only helped us to sell our house in record time but also was very diligent in managing the multiple offers market - she carefully analyzed all the options and helped us dot the i's and cross the t's with choosing the right offer and family. When it came to finding our new home Sophia pulled out all the stops to ensure we got the home we wanted. Sophia built a strong relationship with the selling agent and ensured that our interests were protected. Staying up late into the night negotiating she secured the home we were looking for. Sophia also advised us throughout the process and made sure we did not just settle on any home - someone we can rely on with strong values a great work ethic and her customers interests being number 1.

 

~ Amin D.

We have Sophia as our realtor for close to 3 years and think she is really awesome. She makes it a point to understand our needs and gives us good advice on the market swings and how to offer on the properties that we were interested in. She doesn't push us and respect our thoughts and looks out for us. She always makes time to see us even if it is at the very last minute and helps us through the whole process from inspecting the house and seeing if it fits our needs and personality, to thoroughly asking the buyer's realtor and being absolutely professional in giving a good image to the seller and his/her agent. We bought our new home in 2014. Sophia stayed with us throughout the whole process till escrow was completed and was always still available to help us after.She is well connected and referred us to a great loan agent who gave us the best interest rate and helped us close in 14 days. We will definitely ask her to assist us again if we are going to buy or sell in the future.

 

~ Stan A.

Sophia is the kind of person who makes your house dream come true. That was our case. Sophia listens to you and suggests places that work for you. She tailors time and resources for your special needs. Since we met her the house hunting was accurate and in a few weeks we were able to bid and get our dream house. After many years of house ownership, my wife and I feel very lucky we met her.

 

~ Angelo M.

It's really hard to find an agent who is looking out for you and your needs. Sophia cares for her clients deeply and understands what we want. She will go above and beyond to assist us in meeting the deadlines and helps us with understanding the intricacies of offering and the market trends.

 

~ Surt A.

Sophia Delacotte was the selling agent for our home in San Jose, California in September 2013. We were in contract for the sale in about three weeks. Sophia was a consummate professional from our first meeting, to our open house and through to our move out of state. She is extremely knowledgeable about the real estate market and, with her legal background, a strong and effective advocate for your side of the transaction. She is also a pleasure to work with, very responsive and is committed to making the entire process as stress free as possible. I highly recommend Sophia as an agent who is head and shoulders above most others in the profession. I feel we were fortunate indeed to have had her as our agent.

 

~ Kathy D.

Because of Sophia's clever strategy we made our offer sight unseen. We are now the proud owners of a Condominium. Because of her tireless efforts she made the whole process seamless. Thank you Sophia for all your hard work!!

 

~ Margie A

Sophia made my short sale purchase as easy as it could be. Honest, tough, does what you ask. I was very pleased. She Made sure I had all the right inspections to protect myself.

 

~ Paul B.

As a mortgage originator for over 15 years, I have worked with hundreds of real estate professionals. Sophia is actively involved with the purchase from the time of pre-approval to closing. However, it does not end there. She maintains a business relationship with her clients and is there to assist with any needs from service providers to home information. Her clients are her priority and they are fortunate to have such a fine professional representing them.

 

~ Camille D.

Great advice , incredibly efficient! Sophia successfully guided us to buy a house in a very competitive market, and helped manage the transaction every step of the way. You'll want her on your side!

 

~ Caroline M.

I have found Sophia to be a thorough, ethical, and extremely competent real estate professional. Her knowledge of this challenging real estate market and her passion to advocate for her clients is remarkable. I have worked with many realtors and I count Sophia at the very top of her profession. I have complete confidence that if you are looking for a no-nonsense real estate professional, you will find one in Sophia Delacotte.

 

~ Marc A.

Sophia is the most honest, ethical and loyal realtor I have ever worked with. To this day, I remember her telling me that if the sale wasn't in my best interest, she wouldn't feel comfortable representing me. It was very refreshing to know that the client's best interest was her foremost concern. She stands by her clients from the beginning of the process until the ink is dry on the final document, and follows up after the sale to ensure no hidden obstacles have emerged. She is diligent in her efforts to manage the process of a home sale with all parties involved. She keeps her clients informed every step of the way and works tirelessly to forge a positive outcome. Sophia is also like a member of the family. She displays a true and genuine concern for the welfare of her clients and displays this not merely through words but through her actions. Without hesitation I would recommend her to anyone in need of a realtor that is transparent, ethical, and a true professional.

 

~ Greg Z.

Sophia is very thorough, knowledgeable and helpful. The short Sale process is confusing and worrisome but Sophia was able to help me navigate the paperwork, deadlines and legal jargon. She was respectful, responsive and most importantly, she delivered results! I recommend her.

 

~ Ann A.

I will relocate with my family from Europe to Silicon Valley in summer 2012. Early in my quest to find a home, I was very fortunate to identify and work with Sophia Delacotte, a Realtor with Coldwell Banker in Almaden San Jose. Her help has been invaluable every step of the way from presenting our offer to the close of escrow a few months later. She has been remarkably helpful in particular with regards to dealing with all financial complexities attached to a cross border transaction. Thanks to an amazing sense of attention to details, she masterfully coordinated the entire transaction with all stakeholders and parties involved and made us feel completely safe about buying our first home in the USA. She has clearly exceeded all my expectations and provided a level of service largely beyond the call of duty of a regular real estate agent. I highly recommend Sophia to anyone looking to make a real estate investment in the Bay Area.

 

~ Nadia K.

My wife and I met Sophia socially, and she offered to advise us in our search for investment property in another city. Since then, she has been incredibly generous with her time, and has given us precious recommendations on what deals to go for, or run from. We are very grateful and wish her the greatest success.

 

~ Michel B.

Working with an agent like Sophia is like a breath of fresh air. She is diligent about providing information when requested and quick to respond to needs, or concerns. Her dedication to her transactions, from beginning to end, helps to insure quick and timely closings.

 

~ Heather C.

Sophia helped us purchase our first home, she was patient and addressed all our concerns. She's very responsive and I couldn't have picked a better real estate agent. She is the best!!!

 

~ Sal C.

Sophia is a straight shooter. I learned very quickly that it is of essence to have a Realtor who is bullish and will help you get what you need. Sophia was always keeping us in the loop, very clear with what she needed, the timing of it and the why she needed it piece. The short sale process if very confusing and frustrating for a buyer and yet she seemed to make it as seamless as possible. I would recommend her to anyone that is looking to sell!

 

~ Cindy L.

We met Sophia at an Open House and immediately clicked with her. We have worked together for several months now on various property and development projects. As her clients, we find her exceedingly smart, dependable, and thorough. On our very first collaboration with Sophia, she worked long and hard, carrying us through every detail. She had our back the entire time so we had peace of mind throughout. She's a real pleasure to work with; any client would be lucky to have her in their camp

 

~ Nora N.

Buying a home is stressful, meeting Sophia was a blessing. With our busy schedules she kept us focused and worked too many late nights with us "sorry Sophia" with us on offers. She was the calming factor for us during inspections and negotiations. When we did find the right house, we had a great team, but if it wasn't for Sophia overseeing everything and keeping everyone in the loop, I know we would have had undue stress that we didn't need. Sophia truly goes above an beyond. We owe her a lot

 

~ Lisa B.

More Reviews

Want to Know How Much Your Home is Worth?

Get Your FREE Home Market Analysis Report Right Now!

YES, SHOW ME NOW