All Forum Posts by: Dan H.

I would classify San Diego as purple and not very liberal.  However pockets can be very liberal or conservative.  Hillcrest liberal, RB conservative. On the positive our city wide candidates that win are mostly moderates regardless of their party.  

I suspect our median price is just over $500k as most sources show between 4% to 5.5%  for 2016.  The numbers I was for below $500k was in first part of 2016.  Safe to say somewhere around $500k median price.  So housing is not cheap.  

I love San Diego but our air port is poor.  For domestic flights it is acceptable but for many areas you will have an extra leg and if you have been to fine air ports you will quickly realize that our air port is not good.  Flights to the north east coast literally could not be further. 

The traffic is not good.  

On the positive San Diego has perhaps best weather in US (in my view definitely best in continental us).  

We have good high tech including bio med.  

The community I live in and some other communities, but not all communities, have good schools for your kids.  

Make sure you understand cap expenses prior to purchase.  Perhaps the number 1 mistake I see of newbies is not understanding cap expenses.  Many newbies believe a property cash flows if the rent is higher than mortgage, taxes, and insurance.  They often forget vacancies, maintenance and the big expense of cap expense.  

For self managed small renal I use $100/month maintenance (reality has been a little less), 5% of rent for vacancy (reality has been less), and $250 - $300 month cap expenses depends on thing like attached vs detached, number of bathrooms, size of unit, size of yard, etc). I derived my cap expense by filling out a spreadsheet with expected costs and expected life spans.  You can find a post on my estimate in the San Diego section of BP.  

Good luck.

 I am pro San Diego.  Typically I would do #3 into a duplex to quad in San Diego that would make a better buy n hold investment than your current property.  The problem is the interest rates have gone up significantly in the last 4 or 5 months which in effect has raised the cost of good San Diego buy n holds such that they are not as good.  

I was planning on at least one and probably 2 duplex to quad purchases this winter/spring but due to the interest rate increases have not pulled the trigger. I have more invested in non RE than I had planned and it may stay that way.  

So I would definitely do #3 but I am not sure that I would currently invest it in Buy n hold RE but 6 months ago I would have invested in San Diego RE.

Fortunately it appears you are not forced to 1031 exchange for tax purposes.

Good luck

 Similar but not quite the same.  We made an offer on a duplex $20k over list.  We never received a response from the listing agent.  The property sold for $5k over list.  Our realtor believes the selling realtor had their own buyer and either did not present our offer or indicated some reason why our offer was not as good an offer as the other offer but our offer had no selling of property contingency.  

It was the last duplex to quad to hit the MLS in Poway and it was 3 years ago.

The sad part is 1) I would have gone higher 2) I would have waived the appraisal contingency.  Seeing we did not get a response I could do neither.  It is my belief the realtor did not do the seller right.   I am not a big fan of realtors; too many horror stories.  They are mostly useless for me.  In my market they are clueless. Appraisers are almost as bad.  

Apartments have cap expense.  They vary by locale as both lifespan and cost is local dependent.  In San Diego a kitchen is almost $40/month cap expense.  In San Diego roofs last a while due to mild temps.   However costs are likely higher than most locals.  

You either need a local person to provide you their numbers or start with an existing cap expense worksheet and modify the lifespans and costs for your area.  Eliminate anything that is covered by the apartment complex (roof, foundation, siding, water heater (likely), heater (likely), window (likely), most plumbing, most electrical, etc.).  Items to include is everything in kitchen and bathrooms, flooring, interior electrical, interior plumbing, and interior walls (paint).  

Good luck

I would be interested in attending if it can fit into my schedule.  

I do not want to be the bearer of bad news but that property is more than just cash negative.  It is hemoraging cash.  I show around $450 negative not including maintenance, vacancies, and cap expense.  If I use my numbers: $450 + $100 maintenance + $100 vacancy (5% of rent) + $250 cap expense for a total of $900 negative cash flow per month.   

So you have $140k in equity to lose ~$900/month?   You need far greater rent and property appreciation than I would expect for this to be just an investment that provides any return.  

So my recommendation is to either move into the house maybe doing as @David Faulkner suggested or 1031 exchange it.  It would be difficult to invest the $140k with worse returns than what you are likely going to get with this RE asset. 

Good luck 

Or refinance taking money out. I try to keep my LTV at 70% but not at the expense of significantly higher rates so one of my properties is at about 40% LTV mostly due to appreciation with a loan with a rate so low that I do not refinance it.

I believe every one of my San Diego buy n hold properties has had better than 10% average annual ROI and I purchased my first rental in 1992. I only have 2 properties with any of my initial investment in the properties. I do not have the skills to determine ROI on properties were all the initial investment has been pulled; is it an infinite return at this point?

I have seen the post you reference when it was posted and posted a similar response in that thread.  San Diego RE rose 5.8% in 2016 which was above the national average.  If I purchased a financed buy n hold w 25% down that was cash neutral I would have made 23.2% in appreciation (better than the national average).  I challenge anyone to show me how it is possible for this to be in the worse performers when financed.  I realize you did not derive the original numbers.  

Los Angeles rose 5.5% which is just below my source national average of 5.6%.  Difficult to see how it could make a worse list of last year.  Note using 25% down on cash neutral property would have a first year return of 22%.   Again it is difficult to have Los Angeles on a worse performing list for real estate investors.  

Note both cities would have far out performed any city with virtually no appreciation pretty much regardless of the cash flow because even a 2% property would have only 24% rent prior to any expenditures.   

I can only surmise that the people who derived the list did so as though the real estate were not financed because I cannot think of anything else that could have either city be on any worse performing cities list.