first time buyer in the San Diego area

Developer · San Diego, CA · Member since 2016 · 37 posts · 26 votes

8y

Hi Jesus, I sympathize with your situation. San Diego being the attractive place to live that it is, it has tons of people swarming to it putting in offers. You will find people debating until they are blue in the face whether we are at the top of the market, close to it, or just past it, but the reality is that we are unarguably very deep into the current business cycle. One of the signs of that is the sort of "fear of missing out" buying that is happening in many areas of San Diego. You can see it in any other desirable locale be it LA, SF, Orange County etc.

We all have different perspectives, but my thought would be to learn as much as you can about multifamily investments and then buy one out of state or in another area of California (inland empire etc.) that can give you a decent cash return on your investment. It is paramount in this environment that you "buy right" which is to say never pay over asking price. Easier said than done of course but that is the only real way to protect your money. You also must identify a property that with some work, can rent for more than it currently does. When you go to sell, your property value will have increased due to the income it produces having increased (this assuming the cap rate is relatively stable, which is another topic in and of itself.) Using this as the slow and steady framework for building your net worth is the basis of pretty much any real estate strategy. Let me know if that made any sense.

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Kevin FoxPro Member

Real Estate Agent · San Diego, CA · Member since 2014 · 1k+ posts · 635 votes

8y

Originally posted by @Jesus Martinez:

Hello everyone, my wife and I are looking to buy our first real estate property. We currently live in San Diego and would love to stay within the area. My idea was to purchase a condo and live in it until we are ready to buy a house and therefore keep the condo as a rental unit. After two days of open houses I have realized people are buying any property and placing over valued offers. Today, we went to an apartment complex that looked run down, yet the unit had been remodeled that for a second I forgot how ugly it looked from the outside. We were planning on using a calhfa loan as we are approved for 320K, but it seems impossible to find a property where I can fix a couple of things and gain equity as there seem to be too many over valued offers. I want to gain equity and continue reinvesting into real estate but don't really know if its possible. Are there any San Diego newbies here that have gained equity within recent purchases? Should I hold off until I have enough for a house and try to hack it? Thank you for your time and have a great day.

Hey Jesus,

The market is certainly hot right now, but I wouldn’t let that deter you from your goals.

The more willing you are to take on larger scopes of work, the more likely you are to find a deal that makes financial sense. We are seemingly past the days where you can consistently add significant value via fresh paint and new flooring alone. With a little hard work and creativity, however - opportunities are certainly still there.

That said, feel free to reach out if you’d like to chat in greater detail about the market and your plan for entry. My team and I help our clients execute their various investment strategies all over the county, so I’d be more than willing to share my $.02 on any parts of the process your unsure of.

Either way, best of luck!

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Ben Biggs

Real Estate Agent · San Diego, CA · Member since 2014 · 121 posts · 111 votes

8y

@Jesus Martinez

Stop right there. You're never going to have success in this market with that attitude! You're on a slippery slope that I see many buyers go through. Your expectations were smashed by the San Diego market and I know it hurts, but you need to just put your best foot forward and get your spot.

Property prices are set based off comparable sales. If a place is being offered at $500k and someone buys it for $800k does that mean it's worth $800k? "Expensive" is subjective and "over priced" is an arbitrary term you're using because the market is higher priced than you're used to or were expecting. Go to LA and prices are 25%-30% more. Go to the bay area and they are double. We live on the water, with incredible lifestyle, weather, restaurants, night life, close to mexico, thriving economy with massive development happening, massive military bases, huge amounts of investor capitol, etc. Trust me when I tell you we have not begun to grow yet. If you hold off much longer you are going to be priced out. That $300K condo was $275K in January. There are reasonable options out there in your price range, you just have to be open to them. This market is "expected" to increase about 12% over the next year, and over the next 5 years we may see up to a 30% increase or more. Even if the market softens it will probably be 10-15% and then just keep right on trucking. There are no signs of a market slow down anytime soon so I would just plant your flag and be happy to get whatever you can regardless if it's not pretty or looks exactly how you want it.

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Jesus Martinez

OP

Member since 2018 · 2 posts · 1 vote

8y

Thanks I really appreciate this. I find it really hard to know these things as I do not have any experience in this field other than comments from relatives or co-workers whom do not have their time or money invested in real estate. Thanks for this I really appreciate it!

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first time buyer in the San Diego area

first time buyer in the San Diego area

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