Imperial Beach Market

8 Replies

BP San Diego,

Is anyone familiar with the Imperial Beach Market? My wife and I are looking at purchasing a SFH in the IB area to live in for 3-5 years before renting it out. We currently own a MFH in Logan Heights so I am new to the IB area. I am speculating it will sustain some growth in the future with the addition of the Navy Special Warfare compound, but is anyone else investing in IB right now?

I have been looking at the properties currently on market and was quite surprised how much house you can get for the price within 2 miles of a beach. I know Imperial Beach has some mixed reviews based on location and current demographics but it seems like purchasing a value-add property might not be a bad idea. Any thoughts on what the IB market might do in the near future?

@Christopher Gallardo Hello there Christopher, I'd be happy to share with you my market knowledge for IB. There are a few KPI's that make IB an emerging market. EX: Hotels, trendy restaurants, and other key drivers that are responsible for the slow gentrification that we are seeing now. I will send you a pm if you'd like to talk more about it.

IB has some rough areas but if you are currently in Logan Heights, I doubt it would be a shock to you.

I agree that IB has some reasonable cost RE for being close to the ocean.  Long ago we almost purchased a unit less than 100' from the beach but I witnessed significant drug dealing out of a small apartment complex that was across the street. so we purchased in Chula Vista instead.

You probably know this, but IB is heavily impacted from sewer spills mostly coming down the Tijuana River (that in Tijuana they call it the San Diego river).  The IB beach has many closure days a year.  IB has threatened to sue or actually have sued both the US and Mexico to try to address the issue.  It is not an easy issue to address as Mexico does not have the resources or political motivation to address the issue.  I think it is in part because it mostly affects the Southern US.   Politically it is not a good look if the US spends to provide Mexico better sewer treatment and fix the related issues.

Last I was at the IB pier the pier did not have a commercial resident. 

Also I am not sure but it seems like the sand castle competition has lost some prestige as it used to be a bigger, more recognized event but I think the more recognized event got moved and so now the IB event is less big.  You would have to research the changes related to this but from my perspective IB had a nationally recognized event that seems to now be a more local recognized event and not even the most known in San Diego.

IB has a fair amount of military occupancy due to North Island.  Military often have higher turn over as they get deployed to other locations fairly regularly.  On the positive they pay their rent.

It could be a good long term buy.  I feel the similar about West Chula Vista.

Good luck

@Dan Heuschele

You definitely bring up some valid points about the area. 

Even though you can get property really close to a southern CA beach, its not exactly what most people would imagine as a desireable beach due to the polution in the area. Traditionally, beach towns generate money and tourism due to the beach, if polution is such a large concern how would this impact IB?

One of the big demographics in the area that also seem to impact the potential for growth is the household median income. With IB being so geographically isolated I question the room for employment growth that will bring opportunities to the area that would facilitate the change into a trendier beach town. I know IB has the image of the last true sleepy southern california beach town, but this image could be negativily affecting the area as an investment opportuinity in the future.

Originally posted by @Christopher Gallardo :

@Dan Heuschele

You definitely bring up some valid points about the area. 

Even though you can get property really close to a southern CA beach, its not exactly what most people would imagine as a desireable beach due to the polution in the area. Traditionally, beach towns generate money and tourism due to the beach, if polution is such a large concern how would this impact IB?

One of the big demographics in the area that also seem to impact the potential for growth is the household median income. With IB being so geographically isolated I question the room for employment growth that will bring opportunities to the area that would facilitate the change into a trendier beach town. I know IB has the image of the last true sleepy southern california beach town, but this image could be negativily affecting the area as an investment opportuinity in the future.

It would definitely be a longer term investment as it is not going to transition as quick as East Village did with Gas Lamp and Petco Park. 

However, beach property is so finite.  When better options are exhausted or too costly the other options (such as IB, border state area, and to a lesser degree Oceanside (which has already experienced significant price increase)) are what are available.  I suspect in your lifetime IB will have RE costs that have surpassed many of its current RE price peers.

How patient are you?  Do you want to live in IB?  Do you have children that could be going to better schools (I would seriously consider this if you have children)?  What is the initial cash flow?

BTW if we had purchased the IB place across the street from the drug apartment my return would have exceeded our Chula Vista purchase mostly because the IB SFR was <100' from the beach and beach is precious and finite (more finite than Chula Vista RE). So in that case the IB SFR cost has already surpassed the Chula Vista SFR that was a cost peer.

Good luck

I like Dan's perspective. Fully agree with everything he has said, although I would note that there has been a commercial tenant -- the Tin Fish -- at the pier for several years now.

Also, the Sand Castle Competition is still a big event.  It now goes by the name the Sun and Sea Festival, and it has drawn in over 100,000 people each weekend it was held in the past couple years last I saw.

I've lived and owned in IB for several years and I love the city.  The Mexico sewage issue is a paramount consideration in my opinion, but I would also note that it is nothing new.  Not to undermine the importance of the issue, but the pollution issues have been going on for decades. 

That said, I concur with Dan that there are several challenges relating to resolving the conditions.  If I might throw on my optimism hat though, once they fully move all of the SEAL teams down to the new Naval Coastal Campus from Coronado, the government's attention to the issue *ought* to be higher than ever considering that these guys are out in the water a lot and when you have a state-of-the-art training facility for our elite forces being influenced by polluted water, this becomes a national security issue.  Not that things always work out the way they should, but just saying that I am optimistic that this in conjunction with the mayor's seemingly persistent efforts at drawing attention to the matter brings about better conditions for improvement than ever before.

All of that said, assuming you are comfortable with the potential implications of occasional pollution issues (as I am), Imperial Beach has tremendous room for growth.  Already a small town with growth limitations on all sides (Bay to the North, Estuary to the South, Ocean to West....), the increased housing demand from bringing down an additional 3,000+ active military personnel to the area will only positively reinforce rising rents and prices, barring significant economic influencers. 

To put things in a bit of perspective, nearly all of this rapid gentrification (and it has been rapid in the past 5 years-- you'd barely recognize it from 2010) was triggered by the completion of the Marriott (Pier South) which is a beautiful hotel. Last I checked, their occupancy numbers were better than originally projected and they have brought much attention and increased tourism to the previously neglected town.

In 2014, the lot at IB Blvd and Seacoast sold for $5.5MM to the Hilton Hospitality Management Group, and a NEW 100 room ocean-front hotel "Imperial Beach Resort" is in the works.  In my opinion, that will be significant, having two major names (soft-branded) ocean front hotels.  This along with the businesses constantly popping up (Coronado Brewing, Brigantine, Mike Hess & City Tacos, etc...) only draws more traffic and increases demand.  Ten years ago, this city was simply *blah*.  It's come a long way and it's still coming.

Once you factor in local external influencers as well such as the Chula Vista Bayfront development (which is actually making good progress in the approval process),  I would argue that IB will only grow in demand. 

I certainly think that--despite the water concerns-- Imperial Beach has been overlooked for too long and that especially in the longer run, 10-15 years from now, having invested in Imperial Beach will prove to have been a wise choice.  If looking for a short-term (under 5 years) return that far out-paces the rest of the county, I don't know how likely that will be, but I'm still optimistic.

My 2 cents. 

My husband and I lived in IB and moved out in 2014 for a better school district. My husband still works on North Island and we regret moving out. Mainly because our equity would have soared since then, we would have definitely been able to rent it out now with a great cash flow, and the commute would have been better for us. All the indicators are there that it's growing and gentrifying, but you still need to be picky of your neighborhoods. LEt's face it, some of the families have been there for decades and are not moving.

That being said, it's the same in almost all of San Diego areas. Logan Heights, Bareo Logan, Del Cerro...

I suggest you do buy property in IB, it will still keep growing. Run your numbers, because if you plan on renting to military, they won't be paying $6K/ month. But if it's a luxury beach rental, you will have a high end market. 

Hey @Christopher Gallardo

I certainly see some long term upside in IB. 

@Dan Heuschele essentially nailed every single deterrent I could think of off the top of my head, so not much to add there lol. 

What I can add, though, is that the fact you’d like to owner occupy for several years certainly makes it a more interesting/feasible investment. 

You'd be giving yourself some time to build equity (from both market and forced appreciation) and allowing for some (likely) increases in rental rates before turning it loose as a rental.

In turn, you are giving yourself a much easier path to profit; whether it be through a sale or monthly cash flow.

Well....I can tell you this....My grandfather bought property in IB back in the 80s and he held it for almost 30 years and did very well.  I can remember back in the 80s though it was a lot rougher.  The re-opening of the pier did a lot to improve the area.....(or the sheriff substation :) )and it has been progress (slowly) ever since.  If your holding for the long run you will likely do well.  I still have family there and they like living there.