Looking to invest in San Diego, any tips?

[Gustavo Munoz Castro]

Greetings BP folks! My wife and I will be moving to San Diego next month, we're expecting our first baby and want to be closer to our families for a bit during the first year (I'm originally from across the border in TJ and have "some" knowledge of SD). We own a couple rental properties in the Seattle area and would love to get a new property in the San Diego area while we're down there. Low and behold, the stories about San Diego being an expensive market are all true. We have access to an FHA loan for $440K and have about $100K available for downpayment and/or rehab. Our goals are to get a property where we can live and/or house hack, and once we move away at least break even as a rental. These are the options I see for us after doing some basic research:

1) Larger home with a granny flat. Putting the rents together would approximate breaking even or maybe just above. Something like this: https://www.redfin.com/CA/San-Diego/350-Las-Flores.... We did this with a home in Seattle and it ended up a great deal in a C neighborhood.

2) Two homes on one lot. Variation of the above, something like https://www.redfin.com/CA/National-City/National-C.... Less permitting issues and the like.

3) Off-market. Find off market SFR's or MFH's that need rehabbing and try to get those with hard money/private loans or maybe even 203k. I have experience in prospecting for sellers so this could be an option, not sure if we can get to my price point though.

Main issue I see are the neighborhoods. Trulia crime map says south National City is "safer" than North Park but I just remember folks saying to stay away from National City. Are there any "up and coming" neighborhoods I should be taking a look at? We're pretty adventurous (we house hacked our last home in Seattle in a C neighborhood and it now cash flows $800 per month).

What do you think of our plan? Crazy? Doable? If we're not planning on living there long term, is it ok to buy in a C neighborhood in San Diego?

[Dan H.]

@Gustavo Munoz Castro

National City has a worse reputation than North Park but I feel safe in both locales.

I specialize in Escondido (North inland San Diego). It has a large Hispanic population of mostly working class people. You can obtain a duplex for your FHA loan with 5% down ~$460K and if patient it can be detached. It will likely be a duplex of two 2/1 (many more of these hit market than larger configurations) but with patience you can find a duplex that is 3/2, 3/1 for $460K. If you wanted to go all in at the $550K you could find a triplex. One closed recently (maybe in the last month) in an OK area for about that price (forgot the street but I considered putting an offer on this property but was too busy). A quad also closed real recently (like in the last week) at about that price but I did not like the neighborhood (Lansing Court). Both of these places would have positive cash flow allocating for legit cap expense ($250-$300 for a detached unit per month, so at least $500 for a detached duplex), vacancy 5%, and maintenance.

I really should not be encouraging competition in my area but I am NOT using Escondido because I think it is unique but because I know it well and know what duplex to quad are on the market and what duplex to quad have sold. 

My point is that in working class areas of San Diego (not just Escondido) your finances would allow you to purchase a detached duplex in a safe C type neighborhood with some legit cash flow.

Good luck