Can you find deals in San Diego?

Question

Hi,

For the past year or so I have been extremely interested in beginning to invest in real estate, particularlly the BRRR method. I currently just moved out to the San Diego, CA and all everyone says out here is how expensive all the real estate is. I was curious if this should scare be off and if I should maybe think about a different method of investment or if anybody knew if it was possible to find good deals out here in a hot real estate environment? I was also overwelmed by all the different neighborhoods San Diego has and was curious if anybody had a suggetion on which part of San Diego I should focus in on?

Any help would be greatly appreciated!

Mark Frattini · Answer

Hi @Som Jafari

It's going to be tough and you'll have to play the waiting game to find multifamily property in  North County <$800k. Consider the opportunity cost of waiting two years and losing out on potential gains during that period. If values continue to increase as they are predicted to you might not be able to save fast enough. Also, I think it's good practice to not go for the absolute max the bank is willing to lend which will help you to not be over leveraged. My opinion would be to find a single family home with or without an ADU and rent out the rooms. With $750k to play with you can find something that works from Oceanside to Escondido. I would also look into Rancho Bernardo due to the amount of families who want to be in that school district but cannot afford to purchase.

Twana Rasoul · Answer

@Jeffrey Nabozna Welcome to San Diego!

I highly recommend going fha on a duplex to put 3.5% down and house hack or going VA if you can and do 0% down to purchase a 2-4 unit.

Your budget will determine what neighborhoods you can buy in.  Some areas I recommend for a duplex would be pretty much anything west of 15 freeway, south of 52 and north of 94. In addition to that areas such as imperial beach, Oceanside, Sherman Heights, Grant Hill, La Mesa and Talmadge are decent areas to house hack.

Don’t expect initial cashflow especially if you are buying with minimal down in San Diego but rent increase each year will help you to get to break even then cashflow in a few years while you greatly grow your net worth through appreciation and principal pay down.  Rent increases faster than inflation in San Diego. Rent increase was 3.8% higher in December 2020 than a year previous, in December 2019. You will do great in San Diego if you buy and hold for the long term.

Happy Investing!

Maxwell Ventura · Answer

@Jeffrey Nabozna

SD has outstanding appreciation. It's a buy and hold play. It will be a solid investment while also giving you the quality of life second to none if you're planning to house hack in the beginning. Your Initial cash flow will not look good. As an investor it's typically negative if you're not coming in w/ 20-30%. If you're house hacking an SFR or duplex, expect to have a nice chunk bitten out of your mortgage. Your major gains will come from appreciation over time. Taking advantage of compounding interest on an already high priced asset. Easier to conceptualize on a spreadsheet.

Andy Eakes · Answer

I definitely second Twana's comment. And if I could add a little extra, San Diego is such a popular market for both buyers and renters. Plus with all of the projected job growth, even more people will be coming to SD. So I wouldnt get to hung up on the neighborhood and focus more on landing a deal. The market is projected to grow 8+% this year, one of the highest in the nation. You don't want to miss out.

Som Jafari · Answer

Hi Jeffrey, Welcome to San Diego! I'm in the process of doing exactly what Twana recommend you do at the moment. I'll let you know how it goes, maybe it will help you on your journey. good luck!

Som Jafari · Answer

@Jeffrey Nabozna hey man, are you still looking? My man Twana here found me a nice duplex in Vista that I'm fixing up right now. If you haven't already found what you're looking for I'd recommend getting in touch with him!

Pavan Sandhu · Answer

I'd look for a property with a detached garage so you could turn that into a living space and rent out the main unit(s). New ADU LAWs are a must-know for any CA real estate investor.

Katrina Razavi · Answer

@Jeffrey Nabozna welcome to SD, it's such a great place I'm sure you'll enjoy it. (I'm originally from there but live in the Bay area currently). FWIW, every market is competitive right now, I've put out multiple offers in the Sacramento area, all beaten out. That said, you hv to get specific on the areas you wanna invest in and then focus there. Trust the process and get creative to find deals, i.e. driving for dollars, reaching out to ppl on CraigsList, networking, chatting w/ agents, etc. Agree with @Twana Rasoul regarding the locations to consider. Good luck!

Mark Frattini · Answer

@Jeffrey Nabozna

I would base you decision on your current living situation. Are you currently renting or did you purchase a home? If you are renting now I would look for a property you could owner occupy. This will give you the best rate and terms and give you the utility of living in your investment. If you owner occupy I would suggest house hacking. Buy a SFH and rent out every bedroom except yours.  Your budget will determine what areas you should consider.

Brian Mollo · Answer

I'd agree with the sentiment here. I wish I had pulled off a house hack earlier in my days-it's an absolute no brainer if you can accomplish it...you might have to open your search up to additional areas; not sure if that's an option for you, but as mentioned, getting the deal is the most important part. 15-20 mins from your ideal location shouldn't rule out the property. Yes, it's absolutely competitive and inventory is tight, but there are still properties to be scooped up. Especially since you'll be able to pay more than your average flipper who needs a profit margin built into the acquisition price. Maybe you land a mom and pop owner who is fed up with what they thought was going to be a coupon clipper investment but have run into non-paying tenants. Anyway, good luck and don't give up!

Can you find deals in San Diego?

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