San Diego market for new investor.

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San Diego market for new investor.

Joel Santana
Rental Property Investor · San Diego, CA · Member since 2019 · 12 posts · 4 votes

Hello,

My girlfriend and I are new to San Diego CA, and are very interested in real estate investing.

We have only been here for about 10 months so we lack geographic/ demographic knowledge. As of right now we are heavily focused on being debt free so we are limited with cash. Both of us work and bring home about $135k, which in SD is not very much.

I am very interested in multi-unit, and somewhat interested in arbitraging but I'm in the beginning stages.

Would love some advice.

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  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    7y

    Best initial cash flow is in the working class areas and not the hip areas that many young couples would prefer.

    SFR purchased at retail will be cash flow negative. Duplex to quad purchased at retail are getting challenging to find that would produce positive cash flow but is still possible in the working class areas (not possible in the hip areas).

    There is a lot of completion for the below retail properties and there are some people who can rehab RE a lot cheaper than I can and I suspect I can do it a lot cheaper than most newbies.  That makes it tough, tough on the newbie but also not easy for me.

    For appreciation, the best is accurately predicting the next hip area but without a crystal ball that is difficult. However, all areas have appreciated well (both rent appreciation and market appreciation). If you purchase cash neutral, the recent history has rent appreciation over $100/month on the average SFR. If you had purchased cash neutral 3 years ago you would likely have over $300 positive cash flow today.

    Also you do not indicate if you are from California but in California property tax increase is capped due to prop 13.  So if a property doubles in value you property tax will only go up by the capped maximum (I think 3% but it may be 2% - I used to know but do not really care about the 1% difference now).

    So at your income you will be challenged to find a place that you can afford with a safe reserve. If you do not give up you could find a place that works for you. I would consider starting with a duplex in major need of a rehab and house hacking it. Live in the worse unit and rehab in place. Once it is rehabbed move to the other unit, rent the rehabbed unit at top of market price (it has just been rehabbed), and now rehab the second unit. This should add significant sweat equity which gives the ROI a one time boost.

    Good luck

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  • Twana RasoulBusiness Member
    Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    @Joel Santana welcome to SD! Would be happy to give info on locations if you’d like. But I’d definitely focus on 2-4 unit properties.

    Best of luck!

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