Beginning Investor in San Diego

[Derrick Lloyd]

Hi All!

I am a new investor currently living in San Diego.  I am originally from Orange County, graduated from UCLA, and got my first job a couple years ago here.

I brought a primary residence a few months after I started work and am renting out the extra room to a friend.  The search for this property sparked an interest in real estate and I haven't stopped searching or learning since.

I've recently begun networking in my area.  I've met a lot of people that are in the Renatus education program.  I am not leaning towards doing that since it is expensive, and looking for other learning methods brought me here.

I'm really looking forward to heading down this path, and it seems like there is SO MUCH for me to learn!

Derrick Lloyd

[Lauri Hines]

Hi Derrick,

Congratulations on purchasing a home in one of the most expensive housing markets in the country, and also your interest in investing in San Diego income properties.

I was born and raised in San Diego, and was a broker there for 30 years. When I left 3+ years ago to move to Oregon, I had a couple of commercial real estate franchises and a property management company, so I was very immersed in that market.

I do still own interests in a number of multifamily and commercial properties there, and they can do extremely well, especially the multi family. However, San Diego is one of the hardest markets to cash flow in as an individual investor.

There was a brief period of time, at the height of the recession, when you could cash flow on a single-family rental; however that is no longer the case.

When I tired of partnership investing, I bought a single-family home in Julian and ran it as a vacation rental.

It did extremely well, and brought in over 50,000 a year in rental income with a net of about 2500 per month.

A couple of caveats. One, San Diego and San Diego County are behind the ball on regulation of vacation rentals.

This has become an issue in some communities, and if you are interested in exploring this, I would urge you to thoroughly investigate local VR ordinances and also any potential moves to restrict or eliminate vacation rentals in the market you are considering.

I think Julian is an awesome market because prices are still relatively affordable, and you pull in vacationers from San Diego, Orange County and the Inland Empire. If you run your property well, you can be assured of very high occupancy on an almost year-round basis. I also believe that Julian, being so dependent on tourism and needing lodging for the tourists, will not be quick to try and restrict vacation rentals.

Second, my cash flow was due to the fact that I managed the property myself. This is not hard to do, however it is an entirely different type of investment than long-term rentals, and requires a hospitality approach.

This may not be everyone's cup of tea, although I love it so much I have bought another four houses here on the Central Coast. Vacationers are usually happy guests :-)

Good luck and happy investing.