MOI In a Hot Market (san diego or like markets). Possible? Would you try?

Question

I live in San Diego California, and as I’m sure you are well aware of, the market is quite different than probably 85% of the rest of the country. Space rent is more, the units themselves seem to be more (quick craigslist search). My wife and kid rely on me to make good decisions. My question is…. If you were to in my market like mine, is there a way to be profitable and would it be worth it to invest time and money.

I know more than likely I’ll have to look along the outskirts of the county in order to have any luck being profitable. Is anyone here doing something like this?

FYI I’m not looking to retire from this method or to even become filthy rich. I honestly am looking for something to maybe get me started in some type of investing while maybe making a little extra cash to move up the investment ladder.

Bruce May · Answer

Brandon, just go the meeting and be honest with everyone you meet that you are new and trying to find your way. You'll find a lot of people willing to help and give you real direction. Don't be intimidated by the clubs. Everyone had to be a first timer at some point.

Account Closed · Answer

Hey Brandon,

There are plenty of folks making it in the San Diego--I know a guy flipping houses on Coronado where the median home purchase price is north of $1.3M.  It's going to take some creativity and more capital then most other markets, but it can be done.

Keep reaching out to folks on BP.  See if you can find a mentor or even an unpaid internship with someone doing what you want to do.  There are REI clubs and even occasional BP meet ups where you can network.  Get out there and explore the dance floor!

Best,

Vincent

Account Closed · Answer

I just moved here in March.  Last year I did 7 flips in Western Nevada (near Reno) and used the proceeds to obtain a SFR rental there that is cash flowing.  I am hoping to start flipping here but it is a bit harder with the higher price points and far more folks doing the same thing.  We are in escrow on a SFR in Imperial Beach that, like you stated, won't make me filthy rich but every little bit counts.  Perhaps I'll chronicle it here on BP...

Brandon Heath · Answer

Thanks @Ali Boone, I actually would like to get into Buy & Hold. I hope to make a move in the next year or so using an FHA loan. I would  Love to find some type of small multi. Can you expand on why you feel cash flow may not be an option in our Redonkulous markets? I can see from your profile that Buy and hold is your bread and butter. Mind if I ask how you initially broke into the market? (wannabe go-go dancer, lol)

Bruce M., I right there with you man. Its hard reading posts from other areas and seeing the low entry point other markets starts at. I see you are a agent locally. Do you feel that even having access to early postings on the MLS still don't offer great deals? Is being an Agent in SD county just as tough?

Garrick Oconnell · Answer

@brandonheath

Looks like you have the pro account under analyze> House flipping calculator or RENTAL PROPERTIES CALCULATOR

learn how to use them, learn what the fields mean, run the numbers.

San Diego is a VERY hard city to work in high values, rising market.

Do not be intimidated by the clubs you get to hear from EXPERTS, successful, and experienced people for A VERY SMALL FEE 10-$20 next time you are interested in visiting a club look at what the speaker charges for a similar bootcamp or speaking engagement usually $100's or thousand$ a person.

Cash flow is very hard to get in San Diego it is a second job in the beginning to search for it but read these blogs use the tools provided learn more by researching and taking action.

The easiest way to cash flow in san diego is to house hack a multi family, but not as easy to buy it right or find it. That will be the bulk of the work.

Realtors do not understand investing or tend to avoid it because it does not correlate with the market or help get a commission. It does cost them a considerable amount of knowledge and money to show/ market themselves and properties so they rightly so should receive them.

Ali Boone · Answer

If you learn how to run the numbers on rental properties, calculating cash flow, you'll see that you can't get cash flow in San Diego (in the traditional monthly cash flow sense...not in terms of appreciation or other methods like that). The rental incomes aren't high enough to cover the expenses of what it takes to buy a property there. If you aren't familiar with calculating cash flow, check out:

http://www.biggerpockets.com/renewsblog/2013/01/19...

As far as breaking into the market, do you mean just of investing in buy and holds? Or do you mean location market?

Lynn Harrison · Answer

Brandon, I would be cautious and only invest if the numbers make sense to you. It might make more sense to buy an hour or so away if you find the numbers make more sense there. Numbers are more important than the possibility of "missing out".

Also, Unless you have a great deal of construction experience you should probably hire someone who has that hands on experience to inspect the house. Someone who can give rough repair estimates and a very good guess as to the condition of the framing and foundation.

I'm in Northern Ca, and although the prices are lower they still don't make a lot of sense. Many of the houses I've looked at would cost more to repair than to bulldoze and start over. I see a few of them selling, some repairs being attempted and then the entire house bulldozed or work stopped a month or so later as people have run out of money. Be careful.

Anthony D'Angelo · Answer

@Brandon Heath

It's nice that I have to ability to see the listings as they come in since I am a Realtor, but with the price point being so high it's still not easy trying to get great deals. I need to really comb through and find what makes sense. I'm also seeing that people are getting the better deals with all cash offers, which unless you have the money or access to cash it's tough to compete, but it's still possible.

Hopefully this helps, let me know if you have any questions.

Anthony

Ali Boone · Answer

It completely depends on what you are wanting to do. In high-priced markets like SD (I'm u in LA, so same thing up here too), flipping works and speculating on appreciation. Cash flow is not an option usually. So, it just depends on what kinds of things you want to do...there are a million different methods for investing.

Bruce May · Answer

@Brandon Heath it's possible to make it work here in San Diego. The market really changed a lot last year and most people moved up to new construction, doing add-ons to their flips or a different niche. Looking on the outskirts of the county isn't a bad idea, but it's where you might find more difficult properties to flip, if that's your goal. Buy-n-hold will always require purchasing at the correct price regardless of the market.

Come out to the local clubs and start networking. You'll find your way.

MOI In a Hot Market (san diego or like markets). Possible? Would you try?

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