first time buyer in the San Diego area

[Jesus Martinez]

Hello everyone, my wife and I are looking to buy our first real estate property. We currently live in San Diego and would love to stay within the area. My idea was to purchase a condo and live in it until we are ready to buy a house and therefore keep the condo as a rental unit. After two days of open houses I have realized people are buying any property and placing over valued offers. Today, we went to an apartment complex that looked run down, yet the unit had been remodeled that for a second I forgot how ugly it looked from the outside. We were planning on using a calhfa loan as we are approved for 320K, but it seems impossible to find a property where I can fix a couple of things and gain equity as there seem to be too many over valued offers. I want to gain equity and continue reinvesting into real estate but don't really know if its possible. Are there any San Diego newbies here that have gained equity within recent purchases? Should I hold off until I have enough for a house and try to hack it? Thank you for your time and have a great day. 

[Daniel Frye]

Hi Jesus, I sympathize with your situation. San Diego being the attractive place to live that it is, it has tons of people swarming to it putting in offers. You will find people debating until they are blue in the face whether we are at the top of the market, close to it, or just past it, but the reality is that we are unarguably very deep into the current business cycle. One of the signs of that is the sort of "fear of missing out" buying that is happening in many areas of San Diego. You can see it in any other desirable locale be it LA, SF, Orange County etc. 

We all have different perspectives, but my thought would be to learn as much as you can about multifamily investments and then buy one out of state or in another area of California (inland empire etc.) that can give you a decent cash return on your investment. It is paramount in this environment that you "buy right" which is to say never pay over asking price. Easier said than done of course but that is the only real way to protect your money. You also must identify a property that with some work, can rent for more than it currently does. When you go to sell, your property value will have increased due to the income it produces having increased (this assuming the cap rate is relatively stable, which is another topic in and of itself.) Using this as the slow and steady framework for building your net worth is the basis of pretty much any real estate strategy. Let me know if that made any sense.