San Jose is home to some of the country’s most exciting tech companies and startups and attracts some of the best and brightest young professionals from around the world. When these talented people arrive, renting a home is at the top of their to-do list.
Young professionals are an ideal target market if you’re considering investing in rental property in San Jose. Their fast-paced lifestyle combined with high-paying jobs makes the price of rent worth it to have the right home. If you want to buy a rental property with this demographic in mind, here are the best neighborhoods of San Jose for young professionals:
- Median home price: $997,000
- Median price per square foot: $753
- Rental vacancy rate: 4.8%
- Distance to city center: You’re there
- Access to public transportation: VTA Blue & Green Lines; Frequent CalTrain service to San Francisco via Mountain View & Palo Alto.
- Median rental income: $2,524/month
Downtown San Jose is a vibrant, exciting hub where young professionals can live, work, and play within a square mile. The neighborhood is in high demand among tech companies – Google is reportedly planning an 8-million sq-ft employment district – and boasts the most MBA jobs per capita of any US city.
Aside from work, young professionals are attracted to Downtown San Jose for its vibrant cultural scene. The neighborhood features plenty of restaurants and bars, live music venues, theatres, and parks. Getting around is easy using VTA’s Blue and Green lines, CalTrain service, and bike sharing. And a planned extension of the Bay Area Rapid Transit system into Downtown San Jose will further strengthen its accessibility.
As an investor, you’ll like Downtown for its strong property values and the strength of its economy. As in other trendy neighborhoods, rents are rising faster than house prices. Downtown’s proximity to the airport makes it a lucrative area for vacation rentals, although the City of San Jose restricts short-term rentals to 180 days per year where the host is not present.
2. Willow Glen
- Median home price: $1,700,000
- Median price per square foot: $945
- Rental vacancy rate: 2.0%
- Distance to city center: 3.8 mi
- Access to public transportation: Frequent bus service to downtown and VTA’s Blue and Green lines
- Median rental income: $1,870/month
Southwest of Downtown San Jose is Willow Glen, a large residential area featuring single-family homes and schools with pockets of shopping and medium-density living.
Young professionals like Willow Glen because it offers more living space while still being close to downtown. The neighborhood mostly comprises 2- and 3-bedroom homes with fenced backyards and the occasional pool. Downtown is a short commute away – approximately 20 minutes by car or 30 minutes by bus – and nearby shopping areas offer a mix of restaurants and grocery stores.
As an investor, you’ll like Willow Glen for its variety of options. Small houses and condos can be found for less than $500,000, and multi-unit properties range from two-unit houses to multi-unit apartment complexes. Rents are lower here than downtown, but property values are rising quickly as more young professionals seek greener pastures whence to work-from-home.
3. Naglee Park
- Median home price: $1,600,000
- Median price per square foot: $754
- Rental vacancy rate: 4.4%
- Distance to city center: 1.1 mi
- Access to public transportation: Rapid bus and frequent bus service to VTA’s Blue & Green lines
- Median rental income: $1,555/month
Immediately east of Downtown San Jose, Naglee Park is a residential neighborhood of single-family homes and small rental complexes.
For young professionals, Naglee Park is an opportunity to be close to the action of Downtown San Jose without having to live in it. While downtown is within walking distance, rents here are lower, and the homes are larger. Naglee Park has its share of restaurants, parks, trails, and festivals to complete its small-town vibe.
As an investor, you’ll like the diversity that Naglee Park can attract. In addition to young professionals, the neighborhood is suitable for small families and San Jose State University students. As the demand for density grows close to downtown, the neighborhood could also offer opportunities for redevelopment.
- Median home price: $1,700,000
- Median price per square foot: $968
- Rental vacancy rate: 4.5%
- Distance to city center: 6.5 mi
- Access to public transportation: VTA Green Line and Rapid / Express Bus Service
- Median rental income: $3,650/month
Campbell is best described as a city within the city. While not technically part of San Jose, this south-western suburb has excellent amenities within a short commute to downtown.
Young professionals are attracted to Campbell for its trendy vibe. The area has plenty of restaurants, bars, cafes, green space, and a weekly farmers market. Going downtown for work takes a short 25-minute ride on VTA’s green line or a 20-minute drive. To satisfy a millennial aesthetic, homes in Campbell tend to be newer, larger, and more open than in neighboring areas.
As an investor, you’ll appreciate Campbell’s strong and growing demand, but the main attraction is its many multi-unit properties. You can buy a fourplex in Campbell for the same price as many of the city’s single-family homes. And while you’ll need at least a million-dollar budget to invest in Campbell, a recent run-up in rent prices and lack of local rent controls make up for the high barrier to entry.
5. West Valley
- Median home price: $1,900,000
- Median price per square foot: $1,100
- Rental vacancy rate: 5.3%
- Distance to city center: 7.1 mi
- Access to public transportation: Frequent and express bus service to downtown and Cupertino
- Median rental income: $1,870/month
While not every map agrees, West Valley is the westernmost part of the city; roughly everything south of I-280 and west of Highway 17. The area comprises many suburban neighborhoods and borders the cities of Cupertino, Saratoga, and Campbell.
Farther away from the major tech hubs (Apple’s nearby Cupertino headquarters notwithstanding), West Valley offers a slower pace and more suburban lifestyle some young professionals will find attractive. Those looking to settle down and start a family will gladly trade restaurants and rapid transit for quiet streets and good schools. And those looking for a more comfortable home office will appreciate the opportunity to have a spare bedroom.
As an investor, West Valley will appeal to you for its prestige and affluence. Of the neighborhoods on this list, it has the highest median household income and the lowest crime rate. While a million-dollar budget will certainly help, it’s not required here. Condos and townhomes start at around $600,000.
The bottom line
There’s a neighborhood in San Jose for young professionals of every kind – from those who want the excitement of downtown to those looking for a suburban feel and room to move. If you want to invest in San Jose real estate to rent to young professionals, these neighborhoods are the best places to begin your search.
San Jose is relatively landlord-friendly, with most properties falling outside of its rent stabilization scheme: only apartments with three or more units occupied before September, 1979 are subject to rent controls. However, the city requires landlords to pay tenants compensation when evicting them for reasons within the landlord’s control.
San Jose attracts hundreds of thousands of visitors yearly but may not be the best place to invest in short-term rentals. That’s because a local ordinance limits vacation rentals to 180 days per year when the host is absent. Instead, look to neighboring cities with more generous regulations.
According to the U.S. Census Bureau, San Jose households have a median income of $117,324, meaning half of the city’s residents can comfortably afford to pay up to $3,000 per month for rent.