Buy and Hold in San Diego

[Alex U.]

BP Community, 

I have been a long time lurker on BP.  I love the BP platform, it's an amazing community that has been built.

I think I have listened to over 70 podcasts, and hear week after week where people have done 50, 100, 200 deals, flips, wholesales, buy and hold. Amazing stuff. But does this even work in San Diego. 1% rule 2% rule, there is no way this is going to pencil out in San Diego, unless you are screwing will sellers and giving them way under market to purchase there property. Anything in MLS is retail pricing, and getting any kind of buy and hold return is very very tough. Even on Loopnet, you need $200k per door to get $1500 rent.

I have been trying to buy a rental property with 30% down, and trying to eek out some cashflow in san diego for more than a year. Have not been successful.  I look mostly in 92126, 92129, 92128, 92127, 92131, 92123, 92124, 92130.

So fellow San Diegans, would love to hear your experience, how are you finding your deals, any guidance would be appreciated.  Week after week, Josh Dorkin talks about buying 3/2 bed houses for $70k and renting them out for $900...San Diego just doesn't work.

[Ben Biggs]

Hi @Alex U.

Welcome to the site! San Diego is a very tough market for Cash flow, it's what's known as a Prime Market. The competition here is so fierce, and the demand is so high, that you need to forget all that stuff about 1% rule, 2%rule, 50% rule etc. It doesn't apply to San Diego, except for the occasional deal where someone inherits something or you come in all cash. San Diego is an Equity play, get into something where you won't lose money (a break even property) or in some areas that are less developed (logan heights) get your tenants in place, wait it out, and in the meantime enjoy the incredible lifestyle that is the reason for all the price insanity. The benefit of San Diego is that the rent is very high, and it never goes down. So you can buy here, enjoy the appreciation over time (which it will) and have equity pay down from your tenants, and eventually you can start shaving off the top once you re-fi and pay down principal. 

Hope that helps and good luck!! 

Cheers, 

Ben