[San Diego] 1st Time Home Purchase: SF or Multi-Unit?

Question

My wife and I are looking to make our first home purchase in San Diego and would prefer to invest in an owner-occupied multi-unit building. We found a recent property that we could live in, but not be cashflow positive until after Year 5+ (with conservative assumptions). What are the pros/cons or factors to also consider this opportunity? First time posting, would love to hear feedback and route any calculators for this type of option! Thank you.

Property details:

• - 3 unit building (2bdrm, 1bdrm, studio)
• - Rental Income (approx): $5,500/mo
• - Mortgage (approx): $7,500/mo
• We would choose to live in the 2bdrm, which would cut the rental income to ~$3,000 ($4,500 to cover the remainder of the mortgage)

Alternatively, the single-family option:

• -We buy a single-family home and pay the mortgage of ~$4,500.

Kimo Quance · Answer

If I had it to do all over again I would make my first purchase a multi-unit.  It'll be an easier catalyst to your next investment than an STR.  2-4 units will be your best options for your situation.  What part of San Diego you looking to purchase?

Mark Frattini · Answer

@Kyle Engle

With the recent changes to ADU/JADU the SFH route looks pretty good for a new investor. That way you get the best of both worlds. You can basically turn your SFH into a triplex.

Dan H. · Answer

The property you use in your example has a huge negative initial cash flow.   Is it a beach property?   I suggest you obtain a realtor that is an RE investor with at least a few properties.  The investor real estate agent should be able to identify some better options.

Educate yourself on rental expenses.  Understand the 50% rule.

I buy multi family in San Diego county.  Here is an exercise that I hope you find enlightening.  Ask the investor realtor for a list of duplex to quad that have sold in the last 6 months in the area you are looking.   Drive by half a dozen of them.  This was the first task I assigned to the 2 protégés I have had.  One has been real successful in local RE (catching up to my unit count), the other one has started his journey (owns 2 units).

Good luck

Twana Rasoul · Answer

@Kyle Engle Great advice from @Dan Heuschele It's important to have someone you can lean on for their expertise and those with the a right expertise will usually own multiple properties in San Diego and consistently transact a high volume of the type of property you are interested in.

Kyle Engle · Answer

@Dan Heuschele - Thanks for the feedback! I posted this example with hopes to learn and network with local experts in the SD area. Great tips for our next steps.@Kimo Quance - Good to hear and get confirmation on which route to consider, thank you. We're pretty flexible at the moment with both of our jobs fully remote. Currently, we are studying up /reading books/blog posts/ podcasts, talking with other realtors/investors in the area, and evaluating new listings daily.

[San Diego] 1st Time Home Purchase: SF or Multi-Unit?

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