Cali VS Texas

[Pablo Valencia]

Hello Everyone

My Name is Pablo, I´m just starting to learn about the Real Estate journey, but I am very confused in which city I should start the journey, so the big question is which one is better for a beginner San Diego or San Antonio.

There are to lines of business that I´ll like to start

1. I´m really experience in Maintenance Coordination, so I would like to start offering our services to PM´s and HOA´s

2. I would like to start learning more and invest in BRRRR

The question comes, because I pretty much like both cities, so I´m really confused where would be better to start the business

Hope you can help....

[Dan H.]

I do not know much about San Antonio market so will cover pros/cons of San Diego

Cons

- price of entry.  RE is expensive.  
- poor cash flow. High LTV purchased at retail (off mls) has large initial negative cash flow

- regulations are tenant friendly.  Rent control on MF and if prop 33 passes (last polling I saw had it ahead) it could apply to all housing.  Difficult evictions.  

Pros

- increadible appreciation.  My worse appreciating property that I expect 95%+ of San Diego purchases to have done better is $2700/month.  My best that I expect beat virtually all non commercial residential is over $20k/month

- incredible rent growth.  Even with rent control, prices have risen quickly.  In fact rent control in short run raises rents due to the increased risk associated with not being able to easily get rid of poor tenants. 
- low vacancy.  San Diego has housing shortage. 
- near lowest delinquency, late payment, and evictions in the country.  All 3 are low due to the low vacancy, but evictions are also low due to the difficulty in performing evictions.  
- value adds add great value.  I recently added a half bath were half bathrooms add $50k of value.  
- prop 13 basically fixes the property tax.  This is very much in contrast to Texas where it is not fixed and regularly between 3% and 4%.  I do not know San Antonio’s property tax rate but suspect it is in that range. 

My belief is many markets will outperform San Diego on shorter holds.  However at 10 year holds I suspect few markets beat San diego and the longer the hold, the more better San Diego RE investment will look.  

Good luck