New Orleans, LA · Member since 2015 · 9 posts · 6 votes
My husband and I are moving to San Diego, CA at the end of this year. We are renting out our home that we plan to rent forever, and thinking of buying in Temecula area. The prices are way better than the city, and although its a far commute, we can make it work for now. We will live there definitely for 2 years, with a possibility of an additional 3 years.
Is it worth buying out there or would it be better to just rent and "throw away" our money in CA? We thought we would do the exact same thing we are doing here - buy, rent but eventually sell it in 7-10 years and cash out in CA with their insane market. I really don't know how to run these numbers if it makes financial sense. We talked with a broker and he thinks we are financially stable to buy a home in CA and rent it after we move, but we are pretty scare of the risks involved in owning a home across the country when we move back home.
We also don't want to be the safe people who never take a risk, and get nothing in return. Any input will be appreciated!
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
8y
Not to be picky but Temecula is not San Diego. I live in San Diego. I have friends that live in The Mec. It’s an hour+ away.
My friend finally got me go to up there. You know what’s up there? Something called tarantula hawlks. Ever hear of them? I hadn’t. Look them up. It’s the stuff of damn nightmares. :)
If you’re going to move to San Diego move to San Diego. Depending on what you like to do for fun, living 10000 miles away in BFE will make you meseraible.
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
8y
No one knows if we are at the RE peak. People can speculate and theorize but many will be wrong.
I will show both extreme scenarios historically for a purchase and without a purchase using San Diego RE history.
Prices continue to appreciate faster than the CPI:
You purchase: You have acquired equity via market appreciation and via equity pay down.
You do not purchase: You miss out on the market appreciation and will find it harder to ever purchase in the San Diego/Temecula market. In addition, your rent likely has appreciated because typically rent appreciation lags market appreciation so even it the market were flat for a few years there is a good chance of on-going rent appreciation.
Prices fall 25% over the next 2 years:
You purchase but are living in the property. Historically, in the San Diego market, declines have virtually always been 5 years or less and typically followed by significant appreciation. If you are not over leveraged you ride out the depreciation cycle.
You did not purchase: You can then better leverage you money after the 25% decline and end up with greater value than purchasing before the decline.
The tax advantages of the home purchase is less than it was with the higher personal deduction and the cap on State and Local Taxes (SALT). So I intentionally left the potential tax benefit out of the analysis. I also did not include cash flow because without an identified property, the cash flow is unknown (in San Diego SFR purchased at retail have negative initial cash flow but I do not know this to be the case for Temecula).
My perspective is that if the market declines you could get a better value, but the risk of getting priced out of the market is too high a risk. I would purchase if I was confident that I could stay in the purchase for at least 5 years if required.
Real Estate Broker · Long Beach, CA · Member since 2014 · 64 posts · 33 votes
8y
Have you considered purchasing a property purely for investment and continuing to rent in San Diego? I was faced with a similar situation. Property prices in the area were I was renting were way out of my range, but I found that I could invest in a small multifamily property in a less desirable neighborhoods and still participate in the real estate market. The less desirable neighborhoods offered better cash flow and I was able to purchase a small triplex where the rents covered all the expenses and mortgage payment. The property was still in a very dense metro area where property appreciates well over time and where there is very low vacancy. I have been able to participate in the real estate market for the last two years and I have benefitted from a decent amount of appreciation, tax benefits, and tenants paying down my mortgage. These returns made me feel a lot better about renting and "throwing away" my money. In my opinion it's much easier to make the multifamily properties pencil out in southern CA.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
8y
This one isn't about taking a risk, in my opinion. It's about being smart.
My question would be-- what would the upside be to buying the house in Temecula? My thoughts regarding it are:
If you haven't lived here, you don't even know if you'll like it or if you'd rather be closer to San Diego
You're unlikely going to have any cash flow on it if you rent it out later (prices are too high)
Most likely you will "throw away" more money in closing costs and mortgage interest in the 2-5 years than you would by renting
Life isshort, why not explore the areas of SD you might like to live in. It's an amazing city. You can spend money on buying investment properties outside of CA that cash flow while you rent in SD. It's what I do living in Los Angeles, and that way you can live in the spot that is the most fun for you.
You can always just rent for a year and feel it all out and then make a decision then about whether to keep renting or to buy something, in SD or Temecula or elsewhere.
Trust me, no property is on sale right now so it's not like you'd be buying a deal.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
8y
Not to be picky but Temecula is not San Diego. I live in San Diego. I have friends that live in The Mec. It’s an hour+ away.
My friend finally got me go to up there. You know what’s up there? Something called tarantula hawlks. Ever hear of them? I hadn’t. Look them up. It’s the stuff of damn nightmares. :)
If you’re going to move to San Diego move to San Diego. Depending on what you like to do for fun, living 10000 miles away in BFE will make you meseraible.
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
8y
@Brenna Wood
I’m in the rent and enjoy SD camp. Live on the beach or a fun neighborhood like North Park. Temecula isn’t going anywhere if you want to alternate bw sitting in traffic and being hot!
Real Estate Agent · Temecula, CA · Member since 2016 · 47 posts · 27 votes
8y
Wow! Pretty harsh responses coming in from a lot of folks who've never lived in, nor most likely never invested in Temecula. I happen to live here and love it! I've been here for 11 years after living in the San Diego area for over 20 years as both a renter and an owner. And yes, I love San Diego too. I'm been an agent for many years, so I work with both buyers who live in their homes and a few investors who hold and rent their properties. Honestly, I've yet to have a buyer who has regretted their purchase here. And my investors, continue to purchase here. I have one that is up to 8, and one that now has 9. I have had buyers that have also sold their properties after years of owning here, but only because of work transfers. All of those have sold for a lot higher than they purchased for years before.
As for prices here... they are all coming down, just as they do every year after the summer run. Most likely they will continue to come down as we head into winter... just as they do every year. There is a ton of inventory here because many of the sellers can afford to sell. Some are selling to upgrade for bigger homes, or a home with a pool or bigger lots. Some of the families are military, and moving due to transfers (Big military population of Officers and who won't live on base. Also families who come here to get their kids in our amazing school system!) Some of the sellers are moving on because they've raised their families, and with their kids having moved on to places all over the country, they are following to be with their grandchildren (yes, one reason I too would leave here when that day comes).
No matter what, Temecula is a beautiful place to live. The city itself has neighborhoods with beautiful views. Plenty of shopping, top restaurants and plenty of entertainment. We have a beautiful theater here with great variety. We have a lot of live music. We have so many amazing wineries! We have the casinos with all sorts to offer. We are a destination location for weekly visitors because of all of the above. We are less than an hour to the beach; we are an hour to SD airport, or ONT airport; we are only 1.5 hours to Staples center in LA; we are less than 2 hours to Big Bear and just over 4 hours to Las Vegas.
People come here, worried about the commute or worried about the heat... then realize quickly that those fears are overrated. The commutes are worth the values. The heat... well we get amazing breezes here daily that cool things off every night. And days... well, other than the handful of days that get to 100 that we close up the house and use our AC, We don't even realize how hot it is outside because with just 1 fan going, our house stays cool. And I work all day in my home!
You can get a beautiful 2500-3000 sq. ft. 4-5 bedroom home for under $500K. You can spend $700K and get a house that you'd dream about. And for $1M - $1.5M... you can have an amazing estate in wine country or a ranch to have horses.
Come for a visit. I'd be happy to show you around this "horrible" place!
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
8y
Real estate is consider high risk. Temecula sounds better than most and or most socal is above average to way above average for total returns especially longer term.
Los Angeles, CA · Member since 2018 · 17 posts · 9 votes
8y
@Brenna Wood make sure you have a *VERY* clear understanding of what your commute is going to look and feel like at the times of day you will be making it.
Real Estate Broker · Carlsbad, CA · Member since 2017 · 70 posts · 63 votes
8y
Rent before you buy.
Temecula is FAR away from San Diego, the Beach, and maybe your work.
Rent for a year or two and see if you like it. If you do like it, by then you will know exactly which neighborhood you want to buy into.
Temecula is FAR away from San Diego, the Beach, and maybe your work.
Rent for a year or two and see if you like it. If you do like it, by then you will know exactly which neighborhood you want to buy into.
I have a friend moving down from the Bay Area. He used to live in PB. I’m telling him do NOT move to Temecula. He’d kill himself after a week. Told him if you want a good house for the $ do Carlsbad. Won’t get quite as much per $ as the mec but you won’t throw yourself under a bus either
Real Estate Broker · Carlsbad, CA · Member since 2017 · 70 posts · 63 votes
8y
@Cody L., Carlsbad and Temecula are not even close to comparable. I own a house and a condo in Carlsbad. The price per square foot in Carlsbad is over double that of Temecula.
Temecula has an appeal to buyers who want a 3-4 BR for $500K and under. A price point that does not exist for 3-4 BRs in coastal SD.
As you noted with the price comes a far distance from SD and a long commute. Still some are willing to do it. To each his own.
I’ve looked at buying SFRs in Temecula a few times over the years. Distance and other opportunities coastal have always swayed me to not pull the trigger.
@Cody L., Carlsbad and Temecula are not even close to comparable. I own a house and a condo in Carlsbad. The price per square foot in Carlsbad is over double that of Temecula.
Temecula has an appeal to buyers who want a 3-4 BR for $500K and under. A price point that does not exist for 3-4 BRs in coastal SD.
As you noted with the price comes a far distance from SD and a long commute. Still some are willing to do it. To each his own.
I’ve looked at buying SFRs in Temecula a few times over the years. Distance and other opportunities coastal have always swayed me to not pull the trigger.
Yeah, I hear ya. I've seen $1m places in Carlsbad that are super nice that would be the equiv of a $500k house in The Mec. But at the same price point you get a 2k SF house in Carlsbad vs. a 4k SF house in Temecula. To me that's a brain dead easy call. And I don't even commute (or really even work for that matter ;)
Investor · Carlsbad, CA · Member since 2017 · 19 posts · 8 votes
8y
Hi @Brenna Wood - You should consider the ROI on your time in this equation. Temecula is far from any city center and likely means you are in for quite a commute. I have no idea what driving in NOLA is like, but spending ~2 hrs a day on a CA freeway is not fun. I personally did it myself for years, but eventually saw that light in choosing to rent in a more desirable area of SD (eliminating the commute) and buy in the less desirable areas of SD (putting money to work by creating cash flow). Considering you're likely familiar with the NOLA area, you might consider doing some long distance buy and hold investing in an area you are familiar with that also offers good cash flow. Even with the extra complexities of owning from afar, I highly doubt that owning in NOLA would suck up ~2 hrs 5 days a week like a commute from Temecula to downtown SD would guarantee. Just my $.02...
Bay Area, CA · Member since 2018 · 20 posts · 7 votes
8y
@Brenna Wood Check out this article on whether to buy or rent in expensive areas. It makes a lot of sense to me. I’m considering selling my Bay Area home and renting to drastically reduce my expenses for a much quicker route to financial Independence: https://www.financialsamurai.com/real-estate-investing-rule-rent-luxury-buy-utility/
Real Estate Broker · Temecula, CA · Member since 2014 · 992 posts · 782 votes
8y
Temecula is a wonderful place. I've been here for 10 years (from San DIego originally) Prices are so reasonable here compared to san diego that for many it is worth the commute.
I know many owners who keep their properties once they move away from temecula. Solid, excellent tenants here. (We have property mgmt company as well has have multiple investment properties here ourselves)
Now is good time to buy, in my opinion. The market has slowed a bit and there are many homes to choose from. Interest rates are still low so you can get some great financing.
Best of luck and I'm happy to help you find a place, if you like. Thanks!
Temecula should soon be flooded with homes for sale since the city just outlawed short term rentals. There are 300 in Temecula. I have a SFR rental in nearby French Valley and about to rent it out again - to my chagrin, many of the Airbnb's are also now going to be straight rentals. A glut. May be a good time to buy but I personally am waiting for the market to go down before buying any more homes in the area. Re the commute, my husband and I lived in that area and he commuted to San Diego. Just to give you an idea of the commute, it took him an hour to drive from the highway 76 off of the 15 freeway to the intersection of Thomson and Winchester Rd in Winchester, CA (aka French Valley). In my opinion you are looking at a 1.5 to 2 hour commute to San Diego and the same with your ride home. Carefully consider this. That being said, due to the nature of the city - it is aesthetically very nice - and the excellent schools, it is a good place for rentals. But regarding your own personal residence, be sure you are prepared for the heat of an inland climate. It is semi desert and while it does cool off late afternoon or evening, many are surprised at the temps they will have to endure.
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Brenna Wood we live just a few minutes from PB and La Jolla beaches and pay less than the cheapest rental available in Temecula. You should highly consider buying in San Diego if you are going to be living here. There are many creative ways you can live in the nicest parts of town here while keeping your housing expenses extremely low.
Temecula should soon be flooded with homes for sale since the city just outlawed short term rentals. There are 300 in Temecula. I have a SFR rental in nearby French Valley and about to rent it out again - to my chagrin, many of the Airbnb's are also now going to be straight rentals. A glut. May be a good time to buy but I personally am waiting for the market to go down before buying any more homes in the area. Re the commute, my husband and I lived in that area and he commuted to San Diego. Just to give you an idea of the commute, it took him an hour to drive from the highway 76 off of the 15 freeway to the intersection of Thomson and Winchester Rd in Winchester, CA (aka French Valley). In my opinion you are looking at a 1.5 to 2 hour commute to San Diego and the same with your ride home. Carefully consider this. That being said, due to the nature of the city - it is aesthetically very nice - and the excellent schools, it is a good place for rentals. But regarding your own personal residence, be sure you are prepared for the heat of an inland climate. It is semi desert and while it does cool off late afternoon or evening, many are surprised at the temps they will have to endure.
I'm surprised there are so many STRs. Who stays in temecula for a vacation rental? downtown, little italy, mission hills, costal areas, sure. But STR in the mec? Crazy
Cody, Temecula (have never heard it referred to as "the Mec" in all my 22 years in the area btw) has a fair amount of tourists since the wineries took off some years ago. The area known as "wine country" is aesthetically beautiful - rolling hills, wineries that are very grand estates, even castle-like buildings and some respectable wines. Its a big draw for LA folks who want to get out of the city for the weekend. So the STR market took off a few years ago. I notice that people are ragging on Temecula -- even though we are now back in San Diego county, I would say that Temecula is a great place to raise a family. If a person can get a job in San Diego with off hours, where they are not commuting during peak times, they can do the commute in an hour each way. But the point of my previous post was that you need to be aware up front that you'll be looking at a great deal of commuting time and also that the heat in the summer can be stifling. 100 degrees for a high probably a couple weeks each summer, maybe even higher. So that's the trade-off - great schools and super family-friendly environment, great housing prices compared to San Diego but lots of driving and desert-like conditions.
Rental Property Investor · Oceanside, CA · Member since 2019 · 63 posts · 51 votes
6y
@Brenna Wood
Hi Brenna,
As a few others have said already. Temecula is not San Diego. But it definitely has its own set of perks and is a beautiful place of its own. If you are looking for a little more space and don’t mind the drive I would say go for it. There’s also a few places closer (depending where exactly you’re working) that won’t cost you an arm and a leg. You may just have to go East a bit.
If you are more of a city/night life type of person or would just rather live in San Diego, there are definitely ways that you can own in San Diego for less than renting. I know a handful of people who own in San Diego and spend between $0-1000 a month on housing. House-hacking is definitely a powerful tool here.
Personally, I’ve always wanted a vacation home out here for when I retire so buying was an easy choice but everyone’s goals are different.
Please reach out if you have any questions, hope this helps! :)
