All Forum Posts by: Lauri Hines

Well done! Something tells me you won't be at that full time job too much longer.

@Jorge Barboza Jr., my background is as an asset manager  and investment sales broker for pretty large commercial projects in San Diego and throughout the country.

I grew up with a real estate background and wanted to invest a very early age. I was also cheap, so I managed apartment buildings in order to get free rent and save up money to buy my first house.  We later bought one of the first buildings we were resident managers in as our first multi family investment. We've held and refinances a few times over the years and it continues to be very strong, however cap rates on multi family for the entire West Coast are so ridiculous now that I doubt I would ever buy multi family on the West Coast. Even on the Oregon Coast, which very affordable compared to Southern California, nothing I have seen to date pencils out.

The first vacation rental was kind of a fluke because we wanted a place in the country and again, being cheap, I wanted my vacation house to pay for itself. Turns out that it cash flowed better then any other investments I was looking at, so when I made the move up to Oregon I continued acquiring SFR's on the water or with excellent ocean views, and converted them to vacation rentals. I have four here now, one of which I just bought at auction. The market is getting tighter here but you can still make money on SFR's either as a conventional or VR rental.

 As for where to look, yes the central coast of California could be a good option. Basically you want something that has good access to a number of local attractions and is a popular tourist destination.  

The main thing is that you need to really study and understand the local regulations regarding VR's. Some communities like Newport Oregon, where I focus, have done a very good job of regulating VR's but encouraging them, while other communities have completely banned them.   Also consider how much of a draw the property is in different times of the year. Is it seasonal, or can you rely on year-round steady occupancy? 

My Oregon properties for example are certainly more seasonal than my Julian property was, however I am able to get $400 a night in the summer with a minimum one week stay, and they are fully booked. The rest of the year I do have steady rentals, but not at those rates. 

Each situation is different so just run the numbers and see what makes sense.

 Good luck on your search and happy to help out if you have other questions. 

Hi, I bought one about a year ago with conventional financing. It really depends on the individual home. If they've had a couple of price drops, then they're going to be more motivated to take your offer, including financing contingencies. In my case, the home was one of four almost identical craftsman style homes on the coast that were built by Russian developers. They did not understand the construction standards out here on the coast with the high winds and rain, and all four of the houses went into foreclosure when they begin having water penetration issues. Having four virtually identical houses all going to foreclosure at the same time did not help their sales efforts :-) It took about 16K to replace the siding on the north front of the home. Other than that, an absolutely beautiful home in like-new condition. The home has appreciated over 100K in less than a year. I would always look at a HomePath property, and it is a good idea to make friends with their local agents. They generally use two or more in any given market, depending on the size of the market.

5000 to 7000 on the high-end SFR's in San Diego, but that is San Diego. I have turned to vacation rentals to complement my long-term rental portfolio. Depending on the area, you can get excellent returns.

Hi Derrick, Congratulations on purchasing a home in one of the most expensive housing markets in the country, and also your interest in investing in San Diego income properties. I was born and raised in San Diego, and was a broker there for 30 years. When I left 3+ years ago to move to Oregon, I had a couple of commercial real estate franchises and a property management company, so I was very immersed in that market. I do still own interests in a number of multifamily and commercial properties there, and they can do extremely well, especially the multi family. However, San Diego is one of the hardest markets to cash flow in as an individual investor. There was a brief period of time, at the height of the recession, when you could cash flow on a single-family rental; however that is no longer the case. When I tired of partnership investing, I bought a single-family home in Julian and ran it as a vacation rental. It did extremely well, and brought in over 50,000 a year in rental income with a net of about 2500 per month. A couple of caveats. One, San Diego and San Diego County are behind the ball on regulation of vacation rentals. This has become an issue in some communities, and if you are interested in exploring this, I would urge you to thoroughly investigate local VR ordinances and also any potential moves to restrict or eliminate vacation rentals in the market you are considering. I think Julian is an awesome market because prices are still relatively affordable, and you pull in vacationers from San Diego, Orange County and the Inland Empire. If you run your property well, you can be assured of very high occupancy on an almost year-round basis. I also believe that Julian, being so dependent on tourism and needing lodging for the tourists, will not be quick to try and restrict vacation rentals. Second, my cash flow was due to the fact that I managed the property myself. This is not hard to do, however it is an entirely different type of investment than long-term rentals, and requires a hospitality approach. This may not be everyone's cup of tea, although I love it so much I have bought another four houses here on the Central Coast. Vacationers are usually happy guests :-) Good luck and happy investing.

Great analysis of this first flip. I am sure with your insight, you will kill it on the next one. Best of luck.