San Diego, CA · Member since 2016 · 12 posts · 3 votes
550k for a duplex in south Kensington (92116). 2/2 with a studio in the back of the house. Total 1,248 sqf. Seems that the house can rent between $2,200 - $2,500
Studio I am not sure...I'd probably do short term rental. Does this duplex seems over-priced?
Real Estate Agent · San Diego, CA · Member since 2014 · 1k+ posts · 635 votes
10y
Hey @Account Closed
While there is certainly a chance that this won't pencil out, notice that everyone who immediately claimed that it was overpriced resides outside of SD. They will just never learn....LOL
We have a unique market, which has to be approached uniquely as a result. Kensington is a great neighborhood, incredibly strong rental market, and offers a great deal of upside potential. If you'd like to send me the details, I'd be happy to take a look and give you an INFORMED opinion, rather than just writing it off as overpriced without really knowing.
@Ben Leybovich, thanks for the input. Appreciation is nice, but i am not a psychic and i don't know what the market will do tomorrow, I know people in California who lost millions in 2007-2008 speculating in California. Cash flow is my lifetime friend, he never disappoints. Really love all your biggerpockets podcast interviews.
The only way they lost is if they sold as virtually all Coastal So Cal markets are above their pre 2007-2008 high. If they sold they were likely over leveraged as in the area where I have my rentals and the area my family has their rentals (certainly not all Coastal So Cal areas) there was no rent decrease during that RE depreciation cycle. People moved in with parents or took on additional roommates lowering the demand but there were so many empty bank owned units that the supply was also down. Net effect is our rents were flat during that time.
So I tell anyone investing in coastal So Cal that historically the values will rise (always have) but that in the short-term there are cycles (periods were properties depreciate). I warn that they must have the means and fortitude to ride out the down cycles otherwise they can sell low and lose money.
I have purchased a couple times at near market high times (1992 and 2003) that had the properties initially lose value (the 2003 purchase at its low was down more than $100K). Both properties are above purchase prices and the 1992 purchased property is up close to $400K on a $167K property.
So if you buy and hold long term in Coastal So Cal (i.e. did not sell when the markets have depreciated) it has historically been virtually impossible to lose money (if you try real hard you may be able to find an area where you could have owned 10 years and lost money but you would have to try pretty hard to find that area and that 10 time span). Verifiable fact. Try and find any 10 year or longer window of time and a Coastal So Cal where you could have lost money on buy n hold assuming that it was at least neutral on the cash flow.
Rental Property Investor · Chico, CA · Member since 2016 · 625 posts · 336 votes
10y
@Account Closed....really depends on how much you have to put down also. If you have 250k to put down thereby creating cashflow, and this is how you want to invest then so be it. Maybe not the best but good for you. As far as the new house offer I would offer 100k less than asking. Do you have cash to offer as a cash close? That makes it way more tempting for the seller. All they can do is tell you to pound sand, so offer it. Also, why are they continually lowering price? What is the defect or problem? Know what I mean. Keep us posted. Good luck.
Realtor · Carlsbad, CA · Member since 2016 · 42 posts · 12 votes
10y
Hi Bianca,
Kensington is a sought after neighborhood. And depending on the condition of the property, $1.85 per Sq. Ft. in rent is a respectable amount. You would have probably earned 3% Cash-on-Cash return with 20% down in the first year and doubled your investment before 10 years (i.e., income + appreciation).
By the way, I assumed that the duplex was actually a single unit. $550K for two units would have been a steal ;-)
Let me know if you need some help finding another rental. I'll be happy to help you come up with a game plan and crunch the numbers.
San Diego, CA · Member since 2016 · 13 posts · 2 votes
10y
That's not Kensington proper hence the price tag being so low, I would call that more city heights. Will you be living in one of the units? Are the utilities separate?
Remember when investing in income properties ask yourself .... How many negative cash flow properties can I afford to carry on my working income ?
If you are already filthy rich congratulations you have the money to be even richer, if like most people you are not stinking rich already you will likely end up losing it all. Appreciation does not pay the bills or put food on the table.
San Diego, CA · Member since 2013 · 36 posts · 22 votes
9y
Doesn't even hit the 1% rule also caution on those vacation rentals operating expenses are going to be much higher. Great area but don't expect it to cash flow