Buying a Rental Property in California

Los Angeles, CA · Member since 2019 · 11 posts · 16 votes

Hi All!

I'm from San Diego, California. I'd love to hear thoughts on how much cash should have saved up if i'm looking for buy a property in California. I have a decent amount saved up, but in the areas i'm familiar with (San Diego County and Orange County), I probably couldn't realistically afford a down payment. Does anyone have any recommendations on where to look for properties in California, preferably Southern California? Or should I look out of state? Which truthfully I'd rather not to because this will be my first investment, but I'm beginning to feel like that's my only option. Any replies and advice appreciated, thank you so much for your time!

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Dan H.Pro Member

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

Originally posted by @Jonathan Greene:

@Dan H. what do you think about Escondido? Or even all the way out, Oceanside. I've held in Carlsbad, Encinitas, and San Marcos, but the prices are definitely high for first-time investors. I still think there are deals all over San Diego county, they just aren't on the MLS and don't have their hands up waiting for an investor. But when you find them, they will deal.

@Matt Hrachovy you can find deals out there. I know a few people who are flipping all the time and yes, they are not first-timers, but it's still possible. You will need at least 20 percent down if you aren't going to live there. If you are you could do much less.

We specialize in Escondido with over half our rental units there. I know it well and believe it to be a good market for San Diego county but I have no reason to believe it to be better than other blue collar markets in San Diego (el Cajon, santee, lakeside, etc). Escondido is more expensive than Temecula.

Plus I do not need more competition in Escondido. :=). Seriously, we find it challenging to find properties that meet our buy criteria in Escondido. There is a lot of competition for a few good deals.

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Joe HomsBusiness Member
Flipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
6y
@Matt Hrachovy are you looking to live in it or investment? Fixer or move in condition?
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Matt Hrachovy
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Los Angeles, CA · Member since 2019 · 11 posts · 16 votes
6y
@Joe Homs Apologies I should have clarified. I'm looking at an investment. Ideally move-in, but I'm open to a fixer.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
6y
Typically non owner occupied you need at least 20% down and you can often get better terms with 25% down. You may be able to find owner financing at higher LTV but remember the higher the LTV the worst the cash flow.
Imperial county is cheaper than San Diego and OC, but very different in tenant quality and not something I recommend. For something between Imperial County and San Diego/OC there is Temecula. The RE is expensive but not as expensive as San Diego/OC. The rent to purchase ratio is a little better than San Diego/OC but it’s appreciation has historically been a little worse. It still is not cheap so do not expect it to be cheap, but it will be cheaper than San Diego/OC.

There are some realtors on BP that specialize in Temecula. They should be able to provide better expected purchase costs and rents.
Good luck
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
@Dan H. what do you think about Escondido? Or even all the way out, Oceanside. I've held in Carlsbad, Encinitas, and San Marcos, but the prices are definitely high for first-time investors. I still think there are deals all over San Diego county, they just aren't on the MLS and don't have their hands up waiting for an investor. But when you find them, they will deal.

@Matt Hrachovy you can find deals out there. I know a few people who are flipping all the time and yes, they are not first-timers, but it's still possible. You will need at least 20 percent down if you aren't going to live there. If you are you could do much less.
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
6y
Originally posted by @Jonathan Greene:
@Dan H. what do you think about Escondido? Or even all the way out, Oceanside. I've held in Carlsbad, Encinitas, and San Marcos, but the prices are definitely high for first-time investors. I still think there are deals all over San Diego county, they just aren't on the MLS and don't have their hands up waiting for an investor. But when you find them, they will deal.

@Matt Hrachovy you can find deals out there. I know a few people who are flipping all the time and yes, they are not first-timers, but it's still possible. You will need at least 20 percent down if you aren't going to live there. If you are you could do much less.

We specialize in Escondido with over half our rental units there. I know it well and believe it to be a good market for San Diego county but I have no reason to believe it to be better than other blue collar markets in San Diego (el Cajon, santee, lakeside, etc). Escondido is more expensive than Temecula.
Plus I do not need more competition in Escondido. :=). Seriously, we find it challenging to find properties that meet our buy criteria in Escondido. There is a lot of competition for a few good deals.
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