Rental Market In San Diego

[Josh Gosnell]

I am looking to start investing in rental properties in San Diego.  My plan is to do a house hack and get a triplex and live in one.  Does anyone have recommendations on areas of san diego to look where there is a good price to rent ratio.  This is my first rental property so kind of worried to invest from a distance.  Any recommendations on where to get started or real estate agents in san diego with an investment background?

[Dan H.]

Best projected cash flow is in the worse areas.  These areas seldom achieve their cash projections.  Do not invest in any of the worse areas.

The best actual cash flow is achieved in working class areas. However, working class areas purchased at retail with a high LTV (75% or higher) are likely cash flow negative at purchase so you must be in a position to handle the negative cash flow until rent appreciation changes this. Keep in mind initial cash flow is not the same as actual cash flow.

Working class areas (avoiding any of the worse parts) include El Cajon, Spring Valley, Lemmon Grove, Escondido, Mira Mesa, parts of Vista, San Marcos, West Chula Vista, IB (away from the ocean), etc.

Hip areas or higher class areas will bleed cash (high negative cash flow) at purchase (North Park, South Park, Gas Lamp, Marina, East Village, hillcrest, PB, OB, Del Mar, Coronado, La Jolla, Leucadia, Carlsbad, Poway, RB, etc.).   While these areas will have huge initial negative cash flow, my next RE investment has a good chance to be in one of these areas because value adds can produce greater return in these areas.

Good luck