Cash Flow in San Diego

12 Replies

Hello!

As a new comer to San Diego I'm curious what areas of San Diego produce good cash flow for multi-family properties? 

Looking forward to hearing everyones opinion! 

@Aaron Mack

There is a reason you are hearing the crickets chirp on your question. Unless you were lucky enough to purchase rental properties deep into the market downturn this last time around or have held for 15 years +, cash flowing in San Diego is very, very difficult to do. 

My opinion is that one would have to find a multifamily needing a ton of work to be able to truly cash flow in San Diego. When I say truly cash flow, I am referring to making sure you are accounting for all of the expenses of owning rental real estate - taxes, insurance, repairs & maintenance, capital expenditures, vacancy allowance, landlord paid utilities (more common on multi-family) and management. 

It's possible, but difficult to find. Good luck!

Originally posted by @Aaron Mack :

Hello!

As a new comer to San Diego I'm curious what areas of San Diego produce good cash flow for multi-family properties? 

Looking forward to hearing everyones opinion! 

 Are you opposed to investing remotely?  I'm in California too and have been doing all of my deals in the Midwest for the past 2+ years.

Aaron,

I have been investing in San Diego for the last 15 years. Cash flow is hard to find.

I have a 14 unit building in City Heights that is cash flowing ok, after some renovations. About a year ago, I found a fixer in Ramona that is starting to cash flow after about a year's worth of rehab.

If you are buying rent ready, it's going to be very difficult to find.

Currently, I'm looking to 1031 over to Memphis to find cash flow.

Happy hunting!

Erik

@John Hostetler  

Good point!! From what I hear it is really almost impossible to find cash flowing properties on West Coast or San Diego. One thing I would love to have here that West cost investors have is appreciation we have little to none.

Good Luck and Happy Investing,

Derrick 

@Ivan Oberon I am not opposed to investing out of state but would like to start up in an area I am familiar with which is why I'd like to explore whats out here in San Diego. How did you get started investing out of state? 

@John Hostetler  @Erik Nowacki  Thanks for the information. This is some great insight. What are your guys thought on house hacking? Is moving into a duplex or triplex a good option when cash flow is near break even? 

I am a big fan of house hacking.  I wish I had known about it when I got started.  The more units, the better.  Go for a 4-plex if you can.  Even if you are at break even when you start, rents are going up over time and eventually will pay for the entire property. 

I have recommended house hacking to friends who have done very nicely with a fourplex. 

I always look for value add situations, i.e. rehabs.  What you can do there is take one of the units and renovate it while living there.  Once you are done, move to another unit and rent the renovated unit at a higher price.  Once you've worked your way through all of the units, it should cash flow nicely, rinse and repeat...

Erik

Yep, it's a bummer, but San Diego typically won't get you much (if anything) for cash flow. Same problem up here in LA (and with our colder brethren, San Fran).

@Aaron Mack   it's really hard to get cash flow right now, but you should look east, like El Cajon, Escondido, maybe even Ramona (had a friend buy a cash flowing 4-plex out there last year).

What about driving out to Imperial County? It's only a few hours away and might get you what you want. Good luck

@Erik Nowacki I live in Oceanside and have been investing in Memphis. So far so good. I'm originally from there so I know where to go and not to. It is too difficult in San Diego county to find anything buy and hold. I've even convinced my neighbors to move on to the Memphis market for better cash flow as they have some rentals here and it's much more lucrative in TN.

I do worry that Memphis may dry up at some point and I am looking at other markets around Nashville to go into as long as I can find a good property manager I can rely on.

@Adam Berryman Have you found any major issues with investing out of state ie. tenant problems, property manager struggles, etc? I have a possible opportunity to open up my investments to multi-families around Boise area but my major concern would not being near the properties. It does help that I have a couple friends around the area but I would need to find a good property manager. Have you had success managing the properties from afar? 

@Aaron Mack   - I can put you in the direction of some property managers here in Boise...a solid team on the ground is key!

Originally posted by @Aaron Mack :

@Ivan Oberon I am not opposed to investing out of state but would like to start up in an area I am familiar with which is why I'd like to explore whats out here in San Diego. How did you get started investing out of state? 

@John Hostetler  @Erik Nowacki  Thanks for the information. This is some great insight. What are your guys thought on house hacking? Is moving into a duplex or triplex a good option when cash flow is near break even? 

Aaron, I started flipping houses in Southern California and as my business activities grew, so did my relationships and connections.  I found my investors money could go much farther in the Midwest.  At that point I began to build my teams and fly out to those markets to form relationships and better familiarize myself with those markets, etc... I go to KCMO, for various reasons at least 4 times per year.


Ivan

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