New member, currently located in Alameda CA.

[Charles Rosenbusch]

I am new to the idea of real estate investing.  Most of my knowledge and experience is in stock market index investing and I have only just started to learn about real estate.  My goal is FI in 15 years with a monthly expenses of $4000.  In reading and listening to the FIRE community I have come to realize that real estate investing can be a valuable addition to my asset allocation.  Looking to get into buy and hold single family to 4 plex in the San Diego area.

[Dan H.]

Originally posted by @Ying Gong:

@Dan, the house value level is currently at or above pre-recession level. Is it a little riskier to enter the market right now counting on ROI when housing is at point of overvalued?

It happens I responded recently on another topic to this exact question.  Copied from my other posting...

If I do not purchase another property (multiplex) in the next 6 months it will have more to do with interest hikes (basically 3/8% in the last month) than the current price of San Diego real estate. While I never try to predict the short-term market, I am confident that the long term San Diego market will be appreciate.

Why do I have this confidence? 1) It historically always has appreciated long term. 2) I had a rental and the family had quite a few rentals at the biggest real estate decline ever. Our rents did not go down at all. So if you do not need to sell (i.e. are not over leveraged) then history shows you will be fine with your San Diego RE buy n hold investment. In fact the only way anyone has lost money on San Diego financed buy n hold residential real estate in the last 50+ years is they sold when it was depressed. 3) I have purchased twice near market highs. In 1992 I purchased a SFR for $167K. It probably fell to upper $140s (close to 20% decline). Today it is worth ~$520K. In 2003 I purchased a SFR at $741K. At the low it was probably worth about $620K (again close to 20% decline). Today it is worth over $900K. So I am not afraid to purchase at market highs but of course prefer to avoid purchasing at market highs but no one really knows when we are at the market high. 4) supply and demand.

The supply is very limited in San Diego. It costs about $100K to break ground on new construction in San Diego. That is after you can find and purchase a lot that permits residential construction. Building is also expensive. We are constrained on the west by ocean, South by mexico, North by Camp Pendleton/OC, and East by quickly harsh environment. So the supply is both limited and expensive to add to. The demand? We have perhaps the best climate in the US. We have diverse environment in close proximity from ocean, to mountains, to desert (all less than an hour from virtually any location in San Diego). We have pretty good jobs (not in general the quality or salary of the San Fran Bay area but good compared to 95% of the nation). In short, it is a very desirable place to live with minimal supply.

Before the recent interest rate increases I was planning on buying at least one multiplex between now and spring time. I have recently looked at 3 properties that had good potential. Now I am more on the fence on completing a purchase. Note the recent interest rate increase is approximately equivalent to an 8% cost increase in the past month (using 4.25% as interest rate a month ago and 4.875% now, both ~0 points: non-owner occupied multiplex). ~8% increase in a month is huge. I am having a hard time believing the current interest rate will not drop at least a little but they may not any time soon.

Good luck