New Investor Looking to Flip in San Diego

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

Originally posted by @James Roslund:

Hi BP Community,

I'm a new investor looking to start renovating and flipping SFH in/near San Diego. I have a few unanswered questions that are preventing me from starting to find and analyze deals. It would be greatly appreciated if I could get some answers/opinions from the BP community on the following questions.

1. I plan to start in the 92117 (Bay Park, Bay Ho, Clairemont) because that's near where I live and it's easy for me to become familiar with the types of homes there. The homes prices go up to around 1.4M and I have financing to do deals in any range here. Is this a good place to flip homes? And, are there other zip codes in SD county that would be beneficial to look at to flip SFH?

2. The biggest unknown that is preventing me from effectively analyzing deals is renovation cost. Does anyone have any recommendations on how I can become more familiar with these costs? Additionally, does anyone have any reliable contractors they can recommend so I might call and get mock estimates from them?

3. One contractor told me that no one uses licensed contractors in the flipping business unless they're adding square footage. Is this true? What kind of trouble can you expect if you don't use the proper licensing and permits?

Thanks!

Jim Roslund

#1, my view is higher end areas provide better return on flips than working class areas. So I would think Bay Park (often over $1m) would have more potential than Clairemont. However, there is a lot of competition for good flip candidates so the location may be dictated by what you can obtain.

#2, there are many resource for analyzing renovation costs and it is a lot more than I can cover here. However, the less experience you have, the more safety margin you should use. This will make it tough to find a good flip property because the competition is good, far better than you will be for a while. Far better than I am and we have done over a dozen rehabs. I am shocked how quick and cheap some people in San Diego can flip a property. Do not get frustrated. Do not remove the safety margin to acquire a property. Doing so likely will work out worse than having failed to purchase the potential flip.

As to #3, are you sure he did not say flippers do not usually use a general contractor? Many flippers act as their own GC. it saves money if you already have reliable and good contractors and are capable of managing the effort yourself. We have done quite a few rehabs acting as GC and it does take time and effort to manage contractors. It is not against rules to act as your own GC.

In CA, a contractors license is required for work over $500. For smaller tasks (less than $500) you can use handymen but they typically require more oversight. This is especially true until you find that rare handyman that is very good/competent. Handymen can be cheaper, but sometimes they are not worth the cost savings (unless you have that unicorn skilled trusted handyman).

I mostly follow the contractor/permit rules and have yet to get into contractor/permit trouble. Fortunately, I cannot tell you what happens if you get caught not following contractor or permit rules.

Most Coastal So Cal flippers do not make much, if any, on their first flip. They obtain education that can help on subsequent flips.

Good luck

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James Roslund

OP

Member since 2020 · 2 posts · 0 votes

6y

@Dan H. Thanks for the info it is much appreciated! I found a few posts of investors showing off their projects in Del Cerro. These were 2-3 years ago now, but are you familiar with that area and if it is still profitable for flipping. I haven't found any signs of people doing fix and flips there recently.

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Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

6y

Originally posted by @James Roslund:

@Dan H. Thanks for the info it is much appreciated! I found a few posts of investors showing off their projects in Del Cerro. These were 2-3 years ago now, but are you familiar with that area and if it is still profitable for flipping. I haven't found any signs of people doing fix and flips there recently.

Del cero would be great if you could find a good candidate property but they are fairly rare. The issue is in San Diego there is a lot of competition for flip properties and some very skilled flippers. It means if it is on the MLS, it likely will not produce a great return for you because more experienced flippers can pay more and still produce a good profit.

So I suspect that your area will be chosen by where you can find a good candidate property. The first flip will be mostly a learning opportunity.

So my recommendation to you is educate yourself on as many areas as possible so that you can recognize a good value when you see it. Know what you can afford and have a pre-approval letter and Proof of funds ready. When you see the good value, and know it is a good value, be prepared to jump fast.

Maybe with Wuhan virus there will be more opportunities to find good flip Properties in San Diego, but recently these good flip properties have been scarce.

Good luck

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Maxwell Ventura

Real Estate Agent · San Diego, CA · Member since 2016 · 308 posts · 173 votes

6y

@James Roslund

I just helped an investor on a fix and flip property in Del Cerro. Represented on the buy side & then on the re-list. We were able to make the numbers work, but @Dan H. is right. There is a lot of competition, and once properties hit the MLS the margins will be very tight unless we're able to negotiate something under asking price (usually). The good thing is SD County is huge, and there are tons of great areas to find deals, and tons of areas that are "turning over."

Happy to be of any assistance.

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New Investor Looking to Flip in San Diego

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