My wife and I bought our second condo in the spring of 2013 in Pacific Beach. We knew the market was starting to make a comeback from the bottom, and was getting ultra-competitive as big investors were making all-cash offers and inventory was limited. Opportunities for positive cashflow with any sort of ROI were slim to none.
After months of searching with our realtor, and another long, discouraging day of looking at over-valued properties, we came back home and saw a listing for a 3bd/3.5bth condo that posted that day. It seemed like a good deal - I ran the numbers, and could not believe it. With the $53K downpayment we were willing to drop, a 30 year fixed mortgage, and typical rents in the area, the property would generate a positive cashflow of about $500 a month (about 11% ROI - unheard of for San Diego)! At first, I thought maybe my spreadsheet was wrong, but it wasn't.
We looked at the property the next morning, and made an offer at the asking price on the spot. Another investor came in with a slightly higher offer the same day. Thankfully, since our offer was first, the selling realtor gave us the opportunity to match the other bid. I immediately agreed, and the condo was ours. After 2 years of owning it, not only has it generated a steady stream of positive cash flow, but we have applicants bending over backwards to rent it out, and it has increased in value by $200K! If we can find another good deal, we will refinance this property and use the equity to buy another place. I don't think I will ever find a deal that good again in PB though!
What I learned: "You make your money when you buy a property." Be patient, unemotional, and trust the MATH when you are shopping for investment properties. Then, when an opportunity presents itself trust the numbers and jump on it!
Congrats Chris. The market in PB continues to stay strong. I currently have one SFR re-development in planning and permits and a multi-unit development in escrow both in PB. We also just sold a condo we purchased 4 years ago in PB for almost 200K over what we purchased it for.
Congrats @Christopher Deitz !
You will be hard-pressed to find an area with a more vastly competitive rental market than Pacific Beach. It sounds like you did your homework, stayed patient, and only pulled the trigger when it made sense systematically; not just emotionally. Now you get to enjoy reaping the benefits. Bravo.
If you'd like an extra set of eyes on the market, feel free to reach out and let me know what you look for (in terms of both investment criteria and property criteria). I would be happy to keep an ear to the ground for your next killer deal!
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