San Diego rent or buy?

12 Replies

I am moving from Virginia to San Diego.   The only thing I know so far about the San Diego market is that its a lot more expensive than where I am currently.  My situation is this- I am moving for a job that is a minimum of 2 years. 

I played the real estate game successfully and stressfully in VA for about 5 years and can do pretty much anything. Just trying to decide if its worth getting back in?

I am not sure but I may need to look into a lease option or rent to own situation.

If someone was moving to SD for longer, does buying become more appropriate?

If Ben is only going to be there for 2 years, current plan, yet he is happy to own the property and rent it after the 2 years is up, would the advice tilt towards buying? 

I am assuming that any purchase would focus on finding a deal or something that made sense as a rental long term. Not just a vanity purchase of a 2-year primary residence.

@Ben McMahon , if your brand new to SD rent for at least a year or two. I think is a good rule of thumb when anyone moves to an unfamiliar market.

Once your on the ground out here, see if you want to stay, explore where you would want to buy into, etc.

Enjoy!

SFR at retail purchase if a rental have negative cash flow. It takes time for the rent and market appreciation to provide a positive return without a value add.

The competition for value adds is significant because they are the only properties that make sense as investments in the short term.  Flippers and buy n hold investors are all looking for the value adds that allow them to acquire the property and make money in the first year.

Duplex to quad purchased at retail is possible to obtain small cash flow in working class areas (class C).  You could house hack one of these but without the appreciation acquired over time or the value add, your profit will be consumed at selling.

I agree with @Nick Foster on get to know the area before purchase but I also think that it takes at least 5 years (without a value add) of ownership to have a decent chance of being financially better than having rented (due to the selling costs and the likely negative initial cash flow).

Rent.  If you later decide you love San Diego, plan on staying at least 5 years, and are willing to pay the sunshine tax (the term for our fairly low wages yet high cost of housing) then consider buying.

Good luck  

Ok....well lets be specific

1.what part of town are you working....cause traffics a *****

2. Do you have kids...cause now school dist matters

3. Are you making enough to afford 500k plus prices....cause sd is expensive

4. What lifestyle interests do you want to be close too...cause with that yearly seaworld pass you need to be close.

5. Etc...etc...etc

General information = general rules of thumb answers...

5 plus years expected buying (retail) makes more sense

Rent.

People buy properties to rent out as negative cash flow. Might as well be that renter who pays less in rent then the buyer has to own it. And you keep your flexibility

I'm seriously considering renting a condo in a high rise downtown just for the F of it. I was shocked at how low they rent for relative to their purchase price and HOA (I was seeing if I could buy one to lease out for cash flow. Many would literally be sub 3 CAP at best)

Thanks for the input.  One reason I am even considering buying is because I do pretty well on the value add.  Ive done a lot of fix and flip, and I know where to put money in for the best returns.  

I do have small kids, so neighborhood matters

I have visited a few times, and I generally know what areas at least my wife likes.  All North of downtown.  Rancho Peñasquitos, Rancho Bernardo, Poway, Encinitas, ETC.

As far as my work goes, (First time I’ve worked for someone else in 7 years) I am opening a new branch for a restoration company.  They do mostly apartments, so I am guessing my work will be where ever the jobs are.

Also, the likelihood of us staying more than 2 years is high.  I would also consider renting it out after, if it made sense.  Nice thing is I wouldn’t have to pay capital gains.  

Thoughts?

Rent. Your future in SD is unknown, competition is high for any decent deals, it’s expensive, if you end up holding it long term you will probably see negative cash flow and if you sell for a profit you could have to deal with capital gains taxes. I see a lot of downside and very little (short term) upside.

If you wouldn’t mind temporary negative cash flow and owning rental from OOS(potentially) then pull the trigger and ride it out.

Originally posted by @Ben McMahon :

Thanks for the input.  One reason I am even considering buying is because I do pretty well on the value add.  Ive done a lot of fix and flip, and I know where to put money in for the best returns.  

I do have small kids, so neighborhood matters

I have visited a few times, and I generally know what areas at least my wife likes.  All North of downtown.  Rancho Peñasquitos, Rancho Bernardo, Poway, Encinitas, ETC.

As far as my work goes, (First time I’ve worked for someone else in 7 years) I am opening a new branch for a restoration company.  They do mostly apartments, so I am guessing my work will be where ever the jobs are.

Also, the likelihood of us staying more than 2 years is high.  I would also consider renting it out after, if it made sense.  Nice thing is I wouldn’t have to pay capital gains.  

Thoughts?

 If your renting, why not a fun area?  I grew up in north county. It’s depressing next to areas like downtown, little Italy, Hillcrest, mission hills, Pacific beach. If all the locations you pointed out I’d only suggest Encinitas as it’s a fun beach town. Still too far north IMO. might be better to just look at Carlsbad if you’re going that far north 

I purchased a house in Poway and love it here (incoming biased comments). There are some advantages like a cap on home building, good demographics, great schools etc.. The business park is also growing rapidly. If you're really into rehab there are still old houses here that can be had "cheap" every once in a while. The other cities you mentioned are also great options. 

If you want to discuss more in detail I am happy to share what I know.

I think it would make sense to find a month to month for starters and make a decision when I have my feet on the ground there.  Anyone have a 3 or 4 bedroom open for June?