Should I invest in San Diego, CA?
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Historically San Diego RE has been a great investment. However, RE is more challenging than in recent times.
However it is my view there are only a few paths in San Diego RE at this moment 1) patience. I am thinking years of patience. San Diego has historically out performed virtually all other markets. Over the long term I believe this will continue. However, other markets have the same issue contrary to the posts from OOS agents. I am not that patient. 2) value adds. For the most part these require work and have risk but there are few markets that do better than San Diego via value adds. My last purchase is up over $500k above my costs in 2.5 years. 3) alternate rent models (rent by room, STR, MTR). These require work. Pay a pm and the profit is significantly reduced 4) path of progress. It is getting a little late to leverage the Chula Vista bay front development. However Brown Field upgrades is in its infancy.
You can achieve cash flow by minimizing leverage. However, historically the San Diego return is via appreciation. Leverage magnifies the return from appreciation. Lower leverage equates to lower return. Low leverage is a conservative approach that will be reflected in the returns achieved.
Good luck
31 Replies
Historically San Diego RE has been a great investment. However, RE is more challenging than in recent times.
However it is my view there are only a few paths in San Diego RE at this moment 1) patience. I am thinking years of patience. San Diego has historically out performed virtually all other markets. Over the long term I believe this will continue. However, other markets have the same issue contrary to the posts from OOS agents. I am not that patient. 2) value adds. For the most part these require work and have risk but there are few markets that do better than San Diego via value adds. My last purchase is up over $500k above my costs in 2.5 years. 3) alternate rent models (rent by room, STR, MTR). These require work. Pay a pm and the profit is significantly reduced 4) path of progress. It is getting a little late to leverage the Chula Vista bay front development. However Brown Field upgrades is in its infancy.
You can achieve cash flow by minimizing leverage. However, historically the San Diego return is via appreciation. Leverage magnifies the return from appreciation. Lower leverage equates to lower return. Low leverage is a conservative approach that will be reflected in the returns achieved.
Good luck
@Dan H. Thank you for your help, Dan! I live here in SD, and I didn't even know that those huge projects were being developed down in the South Bay. I'm definitely going to look down in those area.
I get it about being patient down here in SD. I unfortunately do t have that luxury, as my business is changing and I have to replace my salary very quickly here. That's why I'm selling my place and doing a 1031 exchange. I'm going to have to find something within the 45 day period after it sells. It feels like a lot of pressure.
Thank you again for your help. 😊🙏🏼
Quote from @Rose Cole:
@Dan H. Thank you for your help, Dan! I live here in SD, and I didn't even know that those huge projects were being developed down in the South Bay. I'm definitely going to look down in those area.
I get it about being patient down here in SD. I unfortunately do t have that luxury, as my business is changing and I have to replace my salary very quickly here. That's why I'm selling my place and doing a 1031 exchange. I'm going to have to find something within the 45 day period after it sells. It feels like a lot of pressure.
Thank you again for your help. 😊🙏🏼
I am concerned for your financial health:
- I believe RE is more challenging than in recent times.
- I believe the highest cash flow markets have the highest risk.
- I fear a rushed purchase has additional risk.
- make sure you have a good 1031 intermediary.
- I believe the local market is challenging, especially with your goal of immediate cash flow, and not local (out of state) is higher risk and effort.
Where is your current property that you are selling located? what is the asset type! Is there a way to extract equity to help your situation? Maybe PM me the details.
You probably saw I am down the hill in poway.
Please be careful in your choices.
Quote from @Dan H.:
Quote from @Rose Cole:
@Dan H. Thank you for your help, Dan! I live here in SD, and I didn't even know that those huge projects were being developed down in the South Bay. I'm definitely going to look down in those area.
I get it about being patient down here in SD. I unfortunately do t have that luxury, as my business is changing and I have to replace my salary very quickly here. That's why I'm selling my place and doing a 1031 exchange. I'm going to have to find something within the 45 day period after it sells. It feels like a lot of pressure.
Thank you again for your help. 😊🙏🏼
I am concerned for your financial health:
- I believe RE is more challenging than in recent times.
- I believe the highest cash flow markets have the highest risk.
- I fear a rushed purchase has additional risk.
- make sure you have a good 1031 intermediary.
- I believe the local market is challenging, especially with your goal of immediate cash flow, and not local (out of state) is higher risk and effort.
Where is your current property that you are selling located? what is the asset type! Is there a way to extract equity to help your situation? Maybe PM me the details.
You probably saw I am down the hill in poway.
Please be careful in your choices.
Hey there Dan,
I'm nervous too! Thank you for your concern.
I'll send you a PM with more details. But in a nutshell, I am no longer able to receive income from my current rental. (I'll explain more in a PM). I do have a good 1031 intermediary out here. What I didn't explain in my original post is that I am needing to replace pretty much my entire salary within the next year, that is why I am needing cashflow right away. That's just the reality of what's going on.Poway is very close to me! I'll reach out to you. Thank you again for your help!
~Rose
- 1yJason WrayPro MemberBanker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
Rose,
Having a good chunk of change allows you a lot more options in some cases you are your own bank. When you buy a property "All Cash" you can immediately get 80% LTV plus any renovation or repair costs back same month. Similar to a refinance its called "Delayed Financing" you may already know but just wanted to add it in case it helps.
You can also buy a property that cannot pass an inspection/appraisal and considered "subject to" which also allows you to bid with a higher offer accepted. You can use funds to renovate or once you own it pull out a Heloc or again Delayed financing to speed up the ARV and BRRRR if you plan on buying more quickly.
Sand Diego is a tough market unless you are buying a 2-4 units where you can earn more cash based on more doors/units. That allows you to collect more rents with only one tax/insurance bill versus 2-4 separate tax/ins plus maintenance. If you are open to "Out of State" your options quadruple due to a higher purchase to cash flow ration in multiple states vs California.
Even Oregon is a better bang for the buck on the upper Coastline where you can buy a home on the cliff with a private beach for under $2M. Good news is since you reside in CA you can buy it as a Vacation Home/Second Home and put less down, still rent it out or refinance it down the road on a cost efficient and growing coastal market.
Indiana and Ohio are also states that are on popping up as top states for investment property purchases and solid rents. You can still buy a duplex just outside of Carmel around Indianapolis for under $200K with rents between $1400-$1600 per door low taxes and lower insurances. You can find those closer to upcoming development or a few Universities for student dorm rentals which is where a lot of co-living seems to be on the rise for higher rents. SD is great but the Sale prices, Taxes and in some cases HOA's destroy your Cashflow/NOI.
If you’re looking in Oregon I would reach out to a realtor on this BP forum @AJ Wong
Indiana - Reach out to Beau Matlock with the Matlock Group usually send out a nice NOI weekly Hotlist to all investors.
Hope that helps a little, if you ever have any questions feel free to reach out I enjoy talking REI and know SD and surrounding neighborhoods and ARV potentials. Hey there, Jason. Thank you so much for your help. I had never heard of Delayed Financing. I wish I had that option. I spoke to a CPA who specializes is real estate, and it turns out that you can't refinance after a 1031 exchange for at least a year, or even two years, or I could have to pay capital gains tax. That is a very interesting idea to take out a HELOC though. I just looked it up and it looks like I can do that within a few months of closing. I do like the idea of getting a 2-4 unit building. That's what I've been looking for. I am so intimidated about investing out of state right out of the gate, but it does seem to make sense. Thank you for the agent recommendations . 😊🙏🏼
- 1yCorby GoadeBusiness MemberInvestor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
Generally speaking, it is better to invest locally- you'll have relationships with vendors and contractors, you can meet with them and touch and see the quality of their work, etc.
However, there are pros and cons to your market- it's very tenant friendly and properties are expensive.
On the upside, ostensibly there is demand for rentals and appreciation has generally been reliable and reasonable.
We invest in Idaho, which is only a 90 minute flight from there- aggressive appreciation, basically zero vacancy and probably the most landlord friendly state in the country. Happy to connect you with resources there if you like.
Best of luck!
- Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes1y
Is there any consideration to an Out of state market like KC? A lot of investors from California have looked yo Kansas City as more cash flow and landlord friendly.
- 1yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Rose Cole:
Hi everyone! I live in San Diego (out east in Ramona), and I'm curious what you all would say about investing here. I'm a newbie, and I keep hearing to invest locally when you first start out.
I also keep hearing how tough the market is here. I need to have at least moderate cash-flow. I'll be doing a 1031 exchange, so I have a big chunk to put down, and was thinking of looking for a 3-4 multi-family. Would you recommend that focus on certain areas on SD, or maybe lookin more at the Inland Empire, like Riverside or Ontario?Thank you in advance! ~Rose
Hey Rose, welcome to BP! You’re right that San Diego can be a tough market to cash flow in, especially with current prices and rates, even on small multifamily properties. It’s definitely doable, but the numbers can get tight unless you have a huge down payment or find a value-add opportunity. If your main goal is moderate cash flow and long-term stability, you might want to look beyond SD into more affordable, landlord-friendly markets where your 1031 funds go further.
Jimmy Lieu, Red 1 Realty4.9122 Reviews - Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Dan is right, OOS is hard and you will face an additional cost burden local investors don't have. I would say at least 20% or more. And you have operational inefficiencies, because everything you do remote is harder. Local is best. If you go remote, pick a market you can narrow the gap, maybe know a little because you have lived there once, or at least is easy to visit for you. Also, reduce the number of tasks you have to complete remote, because every interaction is prone to issues. Instead of a fixer-upper, buy a property that needs little work. And don't buy in a challenging area, but in a desirable suburb. You'll get better tenants (again, fewer issues) and higher rents.
- Member since 2025 · 104 posts · 37 votes1y
I have a lot of Investors from CA moving their money to the OKC Metro. Good Property Management wherever you decide to Invest is crucial. Congrats on getting into the Game!
- 1yTwana RasoulBusiness MemberReal Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
Hi @Rose Cole as difficult as the market is here in San Diego...there are great deals all the time. I have several small multifamily value add deals in escrow currently all across the county and I just submitted on offer on another multifamily for my personal portfolio as well (also value add). Make the sale of your property a 30-60 day escrow plus the 45 day gives you plenty of time to identify.
Since you are local, you'd be doing yourself a disservice by not at least considering local deals...(I've owned in the MidWest in the past and sold it all of a few years ago).
Compass5122 Reviews@Twana Rasoul That's great advice about making the escrow 39-69 days! That'll buy me some more time. Thank you for that tip. 😉👍
And I may reach out to you. That's awesome to know there are still deals here. I just haven't been able to find them!
- 1yEric FernwoodBusiness MemberRealtor · Las Vegas, NV · Member since 2014 · 1k+ posts · 1k+ votes
Hello @Rose Cole,
Where you should invest depends upon your goal. If your goal is to own a property in California, anywhere in California will work. If your goal is financial independence, that's a different issue. The saying, “live where you like but invest where you can make money,” is one every investor should take to heart. Long-term financial independence requires a rental income stream that meets the following requirements:
- Rents increase faster than inflation. Every time you shop, you pay more. Inflation is continually increasing prices. Only if your rent increases faster than inflation will you have the additional dollars needed to continue paying inflated prices. If you buy anywhere where rents do not outpace inflation, you can not achieve financial independence no matter how many properties you buy.
- Your rental income must last throughout your lifetime. For that to happen, your tenants need to remain employed at similar wages for decades. However, most U.S. companies only stay in business for about 10 to 18 years. So, if you plan to hold a property for 30 or 40 years, your tenants will likely have to find new employers multiple times. Replacement jobs will only be available if new companies come to the city and create jobs that pay comparable wages for similar skills. When companies are selecting a location to set up operations, the basic requirements include (but are not limited to):
- Low operating costs, since every business has competitors. California is known for high operating costs.
- A business-friendly government, which makes it easier to run and grow a company, California is less pro-business than many other states.
- Your income reliability depends on the tenants who live in your property. To have a steady, dependable income, you need what I call a reliable tenant. A reliable tenant stays for many years and always pays rent on time. These tenants are the exception, not the norm. You can improve your chances of always having reliable tenants by buying properties that appeal to tenant segments made up of stable, dependable people. The other key factor is your property manager. You’ll want someone with the skill to consistently identify and select reliable tenants—a talent that’s rare among property managers.
I will add another requirement for successful investing. No rent control of any kind. California has state-level rental controls (AB 1482). Individual cities may have additional restrictions. Rent control may prevent you from selecting the best tenant, limit your ability to evict non-performing tenants, and not allow you to increase rents fast enough to keep pace with inflation.
I live in Las Vegas, and I will compare the environment for investors here versus California.
- Rent control: None
- Time to evict: 20 to 40 days
- No state income taxes.
- Pro business and pro landlord environment.
- Low operating costs (low property taxes and insurance)
We have completed over 90 1031 exchanges, most of which were from California. There is a reason so many investors have decided to exit California.
Another consideration, whether you buy in your own neighborhood or another state, it's essential to work with a local investment team. Books, podcasts, websites, and seminars provide general concepts, but real investing happens in specific cities, with specific properties, with unique rules, regulations, and market dynamics. You'll also need reliable local service providers you can trust. The only source for all of this is an experienced local investment team. Also, working with an investment team costs no more than working with any other realtor, but you get the benefit of years of experience and all the resources you're going to need.
In summary, do not limit yourself to California. Invest where you can make money.
FERNWOOD Team, KW VIP Realty520 Reviews- Counter point:
Quote from @Eric Fernwood:
Hello @Rose Cole,
Where you should invest depends upon your goal. If your goal is to own a property in California, anywhere in California will work. If your goal is financial independence, that's a different issue. The saying, “live where you like but invest where you can make money,” is one every investor should take to heart. Long-term financial independence requires a rental income stream that meets the following requirements:
- Rents increase faster than inflation. Every time you shop, you pay more. Inflation is continually increasing prices. Only if your rent increases faster than inflation will you have the additional dollars needed to continue paying inflated prices. If you buy anywhere where rents do not outpace inflation, you can not achieve financial independence no matter how many properties you buy.
- Your rental income must last throughout your lifetime. For that to happen, your tenants need to remain employed at similar wages for decades. However, most U.S. companies only stay in business for about 10 to 18 years. So, if you plan to hold a property for 30 or 40 years, your tenants will likely have to find new employers multiple times. Replacement jobs will only be available if new companies come to the city and create jobs that pay comparable wages for similar skills. When companies are selecting a location to set up operations, the basic requirements include (but are not limited to):
- Low operating costs, since every business has competitors. California is known for high operating costs.
- A business-friendly government, which makes it easier to run and grow a company, California is less pro-business than many other states.
- Your income reliability depends on the tenants who live in your property. To have a steady, dependable income, you need what I call a reliable tenant. A reliable tenant stays for many years and always pays rent on time. These tenants are the exception, not the norm. You can improve your chances of always having reliable tenants by buying properties that appeal to tenant segments made up of stable, dependable people. The other key factor is your property manager. You’ll want someone with the skill to consistently identify and select reliable tenants—a talent that’s rare among property managers.
I will add another requirement for successful investing. No rent control of any kind. California has state-level rental controls (AB 1482). Individual cities may have additional restrictions. Rent control may prevent you from selecting the best tenant, limit your ability to evict non-performing tenants, and not allow you to increase rents fast enough to keep pace with inflation.
I live in Las Vegas, and I will compare the environment for investors here versus California.
- Rent control: None
- Time to evict: 20 to 40 days
- No state income taxes.
- Pro business and pro landlord environment.
- Low operating costs (low property taxes and insurance)
We have completed over 90 1031 exchanges, most of which were from California. There is a reason so many investors have decided to exit California.
Another consideration, whether you buy in your own neighborhood or another state, it's essential to work with a local investment team. Books, podcasts, websites, and seminars provide general concepts, but real investing happens in specific cities, with specific properties, with unique rules, regulations, and market dynamics. You'll also need reliable local service providers you can trust. The only source for all of this is an experienced local investment team. Also, working with an investment team costs no more than working with any other realtor, but you get the benefit of years of experience and all the resources you're going to need.
In summary, do not limit yourself to California. Invest where you can make money.
GDP California $4.1T, recently passed Japan as 4th largest economy in the world. GDP Nevada. $200.9B. California gdp nearly 20x Nevada gdp. Seems like a lot of businesses like CA.
Ab 1482 limits rent increases to 5% + cpi capped at 10% so it exceeds inflation unless inflation exceeds 10% which has not happened this century. Ab 1482 only applies to MF, rent control is illegal on SFR (costa Hawkins). In my market the current rent cap is 8.8%. Per rent cafe the current average apartment rent in $2955 (SFR would be more but rent control does not spp,y to SFR) so max increase per AB 1482 is $260/month. Limiting average rent increase to $260/month does not seem to be very limiting.
Historically rents have increased more after the implementation of rent control Han prior to the implementation of rent control.
Zillow states the average rent in CA is $2800, it was $602 in the year 2000, a 465% increase.
Zillow states the average rent in nevada is $1995, it was $602 in the year 2000 (same as CA per internet), a 331% increase.
Ca average rent has increased 134% more than Nevada’s average rent.
You can look at average appreciation for this century but we all know what it would show.
Ca has historically been a great market for residential RE investors. I suspect t that will continue.
real estate agents are incentivized to market their area. The reality is most new investors are best served investing in their local market whether that is CA, Nevada, or Ohio. OOS has additional risks to local investors. Non local investor usually have higher costs than local investors. Non local investors are placing a lot of trust on their remote team.
Best wishes
- Investor · Toledo-MetroDetroit-Dallas · Member since 2022 · 122 posts · 71 votes1y
Quote from @Rose Cole:
Hi everyone! I live in San Diego (out east in Ramona), and I'm curious what you all would say about investing here. I'm a newbie, and I keep hearing to invest locally when you first start out.
I also keep hearing how tough the market is here. I need to have at least moderate cash-flow. I'll be doing a 1031 exchange, so I have a big chunk to put down, and was thinking of looking for a 3-4 multi-family. Would you recommend that focus on certain areas on SD, or maybe lookin more at the Inland Empire, like Riverside or Ontario?Thank you in advance! ~Rose
San Diego's a great place to visit and live but definitely tough to make the numbers work for cash flow. If your main goal is moderate to strong returns, you might want to look beyond California. In the Midwest markets like Toledo and Detroit, you can still find $100K SFH properties that meet or come close to the 1% rule (around $1,000/month rent) in solid, middle-class neighborhoods. In fact even Dallas condos can come close to these ratios, though its getting tougher by the day!
It’s a big contrast from coastal markets, and the lower entry price makes scaling a lot easier. Happy to share some examples or walk through what those deals typically look like if you’re curious about what worked for me and my investors in these markets.
- Real Estate Agent · San Diego, CA · Member since 2023 · 189 posts · 88 votes1y
Quote from @Rose Cole:
Hi everyone! I live in San Diego (out east in Ramona), and I'm curious what you all would say about investing here. I'm a newbie, and I keep hearing to invest locally when you first start out.
I also keep hearing how tough the market is here. I need to have at least moderate cash-flow. I'll be doing a 1031 exchange, so I have a big chunk to put down, and was thinking of looking for a 3-4 multi-family. Would you recommend that focus on certain areas on SD, or maybe lookin more at the Inland Empire, like Riverside or Ontario?Thank you in advance! ~Rose
Hi Rose, I am an investor as well. I don't settle for anything less than good cash flow so I understand. But that is also why I buy mainly out of San Diego. Cash flow is generally tough to get here, but possible if you're creative and depends your loan details.
What numbers are you looking at? How much is your down payment? - 1yTwana RasoulBusiness MemberReal Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
Agreed @Dan H.. California certainly doesn't make some things easy but it is amazing the number of people will say "I will never buy in CA" or "will never do business in CA" when it is the 4th largest economy in the world as you said.
We all get exposed to different things. While many in other markets see California investors exchanging out, what I'm exposed to mainly here in San Diego are the many investors who are selling in Nevada, Arizona, Texas, etc and purchasing here.
And certainly as agents, we are going to see and talk about the positives of our respective markets because of incentive...However, I truly believe in the San Diego market and that is why I invest here myself; I'm currently in escrow for another personal purchase of a multifamily here.Compass5122 Reviews@Twana Rasoul That's good to hear. It sounds like if I can find the right deal, that it can still work here in SD. That's good to know.
Quote from @Twana Rasoul:
Agreed @Dan H.. California certainly doesn't make some things easy but it is amazing the number of people will say "I will never buy in CA" or "will never do business in CA" when it is the 4th largest economy in the world as you said.
We all get exposed to different things. While many in other markets see California investors exchanging out, what I'm exposed to mainly here in San Diego are the many investors who are selling in Nevada, Arizona, Texas, etc and purchasing here.
And certainly as agents, we are going to see and talk about the positives of our respective markets because of incentive...However, I truly believe in the San Diego market and that is why I invest here myself; I'm currently in escrow for another personal purchase of a multifamily here.Here is an interesting factoid, CA has the highest percentage of investor owned SFR of any state. There certainly seem to be a lot of RE investors content to invest in CA.
In addition, when case Shiller used to publish their list of cities by residential return for this century the top 3 cities were San Francisco (which likely would have fallen from the top spot if a current lest was published) , Los Angeles, and San Diego.
Past return is not necessarily an indicator of future return but has much changed in the fundamentals?
I say this even though I am not nearly as optimistic about the local RE market as I was for years. With my under writing, 1% rent ratio properties in San Diego likely have negative cash flow and 1% local rent ratio properties are a unicorn find (but I purchased one in Dec 2020). In addition, the rent and appreciation have been flattish over the last 2 years (depending on the source of the data). The implication is that a negative cash flow property purchased 2 years ago without a value add is likely at least as negative cash flow today.
In addition, I have 2 insurers of my local rental properties. One of them is pulling out of rentals in Ca and the other is not accepting new rental properties in ca. the quotes I am getting from a new insurer are significantly higher than what I was paying before.
Fortunately my properties have great loans and my cash flow, while modest for the property value, is enough that I can live the life I want. I have virtually every toy except a plane and that is on my list. I vacation when and where I desire (I am on my third vacation since the start of Sept).
However, high LTV local investors that have purchased in the last couple of years without large reserves or income large enough to cover the negative cash flow are hurting. Virtually all non value add RE investors who have purchased local in the last 2 years are not getting a good return on their investment.
Compare this to just a few years ago where a 0.7% ratio with my underwriting had positive cash flow and appreciation and rent growth were outstanding and forecasts projected them to continue to be good for a while.
Maybe I am a spoiled investor. If I used the same buy criteria as I used a few years ago, I would not even make offers in this market. But I am an RE investor and I have a desire to make offers, so I make offers.
My belief is most RE investors who buy LTR off the mls in San Diego will have poor returns in the near term. I suspect by the time they own 10 years their returns might be fine, but I am not that patient.
Good luck
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1yCalifornia is punishing to investors. Next door, Arizona or Nevada love investors. That's why I selected AZ. Others choose NV. Sometimes I select TX, but I've been making better returns in AZ with fewer hassles & more options.
Quote from @Rose Cole:
Hi everyone! I live in San Diego (out east in Ramona), and I'm curious what you all would say about investing here. I'm a newbie, and I keep hearing to invest locally when you first start out.
I also keep hearing how tough the market is here. I need to have at least moderate cash-flow. I'll be doing a 1031 exchange, so I have a big chunk to put down, and was thinking of looking for a 3-4 multi-family. Would you recommend that focus on certain areas on SD, or maybe lookin more at the Inland Empire, like Riverside or Ontario?Thank you in advance! ~Rose
- 1yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@Rose Cole, I personally would start local to get familiarity and want hands-on experience. You don't know what you don't know - sometimes until it's too late. And local will accelerate your learning curve.
The accountant you talked to about refinancing is wrong!! The IRS has no problem with you refinancing a property after you purchase it in a 1031 exchange. The IRS does have a problem with refinancing right before a sale and the start of a 1031. The mantra in the 1031 industry for how long you had to wait to refinance was "long enough to put down the pen you signed the closing papers with and pick up the pen to sign the refinance papers. There hasn't been any relevant case law specific to this issue come out in the last 20 years to change that. You can put delayed financing back in the picture.
Wishing you the best with your 1031 exchange! You’re making a smart move by researching and reaching out to others on this forum.
The 1031 Investor5140 Reviews - 1yTwana RasoulBusiness MemberReal Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
Thanks for sharing, interesting data. I knew about the top three cities but didn’t realize they also had the highest share of investor-owned single-family rentals.
It’s definitely gotten tougher. At this stage, value-add opportunities are essential for me. When I started, I avoided them because I had little to no capital to invest beyond the purchase itself. As beginner investors, being highly leveraged and taking on risk doesn’t feel as heavy since there’s not much to lose or many alternatives. Over time, though, that mindset shifts as experience and exposure grow.
Compass5122 Reviews - 1yAshish AcharyaBusiness MemberCPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
Since you’re doing a 1031 exchange, that’s a really smart tax move if you set it up correctly. A 1031 lets you defer capital gains tax by reinvesting proceeds from your sale into another property of equal or greater value.
However, most people don't under is that basis carries over, so don't expect to depreciate the total new purchase price
This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
INVESTOR FRIENDLY CPA®4.9242 Reviews@Ashish Acharya Thank you. That's good to know. 🙏🏼
- 1yRaymond J. RodriguesBusiness MemberLender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
@Rose Cole depending on how much cash you're working with and if you are open to short term rentals, @Josh Green has a solid operation going on in the Tampa Bay area that covers all the bases. From sourcing properties, getting them setup/furnished and even the management portion as well. He has helped quite a few BP investors from all over the US with acquiring hands-off investments, with solid returns/cash flow. Especially those that are in a time crunch with their 1031 exchanges.
Helm Mortgage Corp.5126 Reviews@Raymond J. Rodrigues Hi Raymond. Thank you so much for the referral. I really appreciate it. I'm definitely open, and will reach out to him. 😊
- Member since 2025 · 2 posts · 0 votes11mo
We have had good success in north county with building adus. They bring a lot of cash flow but for my properties they didn't add a lot of equity. That could change in future because places like San Diego city and county will allowing you to sell an ADU separate from main house. I am hoping this will make building adus add much more equity.
- Real Estate Agent · San Diego, CA · Member since 2023 · 189 posts · 88 votes9mo
Quote from @Rose Cole:
Hi everyone! I live in San Diego (out east in Ramona), and I'm curious what you all would say about investing here. I'm a newbie, and I keep hearing to invest locally when you first start out.
I also keep hearing how tough the market is here. I need to have at least moderate cash-flow. I'll be doing a 1031 exchange, so I have a big chunk to put down, and was thinking of looking for a 3-4 multi-family. Would you recommend that focus on certain areas on SD, or maybe lookin more at the Inland Empire, like Riverside or Ontario?Thank you in advance! ~Rose
When considering an investment in San Diego, it’s important to evaluate both the local landscape and the broader market dynamics. San Diego’s real estate is known for its resilience and consistent appreciation, making it an attractive option for many investors. However, cash flow can be more challenging to achieve, particularly with market prices continuing to rise. I recommend focusing on emerging neighborhoods that are undergoing revitalization—areas like Logan Heights or parts of South Park could offer good potential for moderate cash flow while benefiting from appreciation as the community develops.
Another option to explore is the multi-family or co-living space market. Given your interest in investing, investing in properties that cater to co-living arrangements can attract a wider tenant base, especially in urban settings where affordability is a concern for many renters. By offering flexible living situations, you may find stable occupancy rates and potentially better cash flow metrics. Understanding the target demographic in these areas can help you tailor your offerings for maximum appeal.
Additionally, compared to out-of-state options, investing locally can allow you to leverage your knowledge of the region and its market cycles. Always ensure you're analyzing the numbers and performing a thorough due diligence process—including assessing potential operating costs, occupancy rates, and local regulations that could impact your investments.
Lets connect. Feel free to message me if you have any specific questions I can answer!
Keith Mintz
Licensed realtor and investor
Specializing in co-living & care homes@Keith Mintz Thank you! This is all sound advice. I'll definitely reach out. 😊
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