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Updated over 6 years ago,
[Calc Review] Help me analyze this deal in San Diego
*This link comes directly from our calculators, based on information input by the member who posted.
I am looking to put an offer on a property in San Diego, in 92102 area code. The property is a duplex, with purchase price of $529k. Each unit has 2bed/2ba. What attracted me to this property is that it is sitting on a 11,144 sq ft lot. Each unit has its own yard but on top of that there is a huge unused lot. My plan was to maybe build more units on the lot later down the line, however I recently found out that based on the zoning I wouldn't be able to build more units on said lot. I spoke to my real estate agent and he mentioned that a law was passed recently in which you can get a permit to build a 1bed/1ba on a lot that meets the required sq ft. The permit alone would cost about $20k and as a baseline I know that there are companies that sell premanufactured 1bed/1ba guest houses for about $50k (~$600/mo if financed). However, not sure if hiring a contractor would be cheaper than buying a premanufactured guest house? If not then I was also thinking of the possibility of purchasing a 'tiny house' and putting it on the lot and living on that while renting out the duplex completely. I have been trying to come up with different exit strategies.
Please see my link to my calculations, I used the Rental Property Calculator. I would really appreciate some help in analyzing this deal so that I can make a better informed decision on whether to pursue this property or not. Currently one of the units is being rented out for $1500 and the second one is vacant. The average rent for a 2bed/1ba unit in that same area is about $1650. Based on the mortgage payment that my broker helped quote me at it looks like it would be around $3665/mo. If I were to purchase the property I would have to honor the current tenants lease (not sure when that ends), which would mean that my monthly payment would be about $2165 for the second unity. I am currently renting an apartment with my boyfriend in an area closer to work for about $2000.
If I am already paying about the same amount in rent, wondering if it would be worth buying the property even if it means that it is currently not cashflowing. I would really appreciate the feedback!