All Forum Posts by: Emy Bernardo

If you like the home, can afford it, and plan to be there for a while (which it sounds like all those apply), then I wouldn't second guess your decision.  No one has a crystal ball.   Higher interest rates may slow the rapid appreciation some, but even if they notch up a point or two, we are still in historic low territory for rates. I don't see any indicators that we are going see significant increases in inventory in the next year or two. (I would love to be wrong so feel free to correct me to anyone that is reading this!)  My bet is that it is going to be a seller's market in San Diego for the foreseeable future.   Feel lucky that you have a good agent and your offer was accepted. :)

As the Real Estate Guys always say " live where you want to live and invest where the numbers make sense".   

As long as you've crunched all the numbers including insurance costs and reserves for vacancy and maintenance, and you are still cash flow positive, I'd say go for it.  Rents will continue to go up, the debt will get worn down by the impending inflation, you have the tax benefits, and a home that if you had to escape California, could move to one day.  

@David Clinton III  Hi Dave!  I believe we spoke a few years ago about investing.. Part of the 170 was the downpayment and we originally had thought we could spend 35k on rehab but ended up around 55kish.  That includes all furnishings for the airbnb too.  It adds up quick. Probably going to need to paint the exterior this spring so I don't think we are quite done.  

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $550,000
Cash invested: $170,000

This isn't our best investment for COC return but we broke some of the rules since we plan on retiring here in a couple of years to be close to our kids and grandkids. This property is located in Sanders Beach which is a very desirable area for STR - just blocks to beautiful lake CDA and minutes to dining and shopping downtown. Currently, breaking even on rent during winter months w/ long term tenant and gearing up to rent on Airbnb for summer tourist season. This will be our first Airbnb.

What made you interested in investing in this type of deal?

Location in Sanders Beach and future home for us to enjoy..

How did you find this deal and how did you negotiate it?

Our son is an agent and found it for us. We weren't even looking but it had too much potential to pass up! The seller accepted our offer and didn't counter offer. Listed for $599k.

How did you finance this deal?

We had some cash on hand and also took loans from our 401k to help with rehab and down payment. (20% down).

How did you add value to the deal?

It needed quite a bit of work -we finished the basement and added a second full bath, all new flooring, interior paint, doors, appliances, painted cabinets, new butcher block counters. We did all the work except for tile and floors, and plumbing for the new bathroom. Also, new windows going in soon.

What was the outcome?

We rented it out pretty quick to a family that is waiting to have their house built. We will airbnb when they move out in the spring.

Lessons learned? Challenges?

Long distance remodeling is tough. Wouldn't have been able to do it if our son didn't live local and was able to help us out. We also undertook this project at the tail end of summer 2021 and car rentals were non existent or cost prohibitive. For one of our trips, we rented a Uhaul van and another trip tried Turo for the first time. Both worked out pretty good!
Another challenge was finding furniture and ordering stuff online and trying to time the delivery for when we would be up there.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, Steven Howie w/ Kelly Right Real Estate and Jack Forsythe w. SWBC mortgage.

@Robert Comstock  - good point about using the rents to help qualify.  The bummer is that Fannie/Freddie loans are going to start charging an additional fee (up to 1% depending on loan to value ratio)  for jumbo loans starting April 1st.  The conforming loan limit in SD is now up to $879,750.  Here's a map that shows the limits throughout the country.
https://www.fhfa.gov/DataTools/Tools/Pages/Conforming-Loan-Limits-Map.aspx

Hi Natalie - It's a tough situation - the housing market is unhealthy here in my opinion and equally tough for renters and buyers.  That said, if you are unsure that San Diego is a place where you see yourself living for the next 7-10 years, it's probably better to rent. Keep as much liquidity as you can until you can find a good deal where the numbers make sense somewhere else.  Maybe start looking for properties where you eventually want to live and rent it out until you can get there.  That's just my 2 cents.  Good luck!  

If there is anything I can do to help on the real estate transaction end, feel free to reach out.  I'm here in San Diego..

Always, check with the local jurisdiction and it's planning department to double check any information you find online.  
GIS maps are a good start, especially if it include links to the corresponding municipal code/ordinance for allowable uses.  In my experience, the only way to truly "decode" is to talk to a planner.  You will most likely glean a lot of useful information and they are your most reliable resource. Some agencies are easier to work with than others. 

Good luck! 

A headache for sure.  Definitely, seek legal advice.  While the statewide and I believe SD County eviction moratorium has ended, check w/ the local jurisdiction (City of Poway?) to see if they have any other restrictions in place.   I know there are funds available for rent relief - not sure if this would apply to these tenants or help your situation.  https://www.sdhc.org/news-rele... 

Cash for keys is always an option.   

Good luck! 

@Zach Wain  great post.  It brings up many questions for me as to what are the unintended consequences of the FHFA fees and polices. Would love to hear from others on this..

What does this mean for investors looking to purchase a second home? Well, I suppose you could change your strategy and buy the home as an income property. But that would mean renting it as a short or long-term rental and IRS rules would limit the amount of time you can stay in the property. 
And, what if the city or county doesn't allow short-term rentals? Or, you are buying a condo and the HOA has restrictions on rentals? Or, you just don't want to deal with the headaches of being a landlord?

On the flip side, maybe this will create more investors and BiggerPockets members!

Will more second home buyers look to private lenders? If so, that won't help the FHFA's mission.

What does this mean for existing homeowners who are considering selling and upgrading to bigger, more expensive home and need a jumbo loan? Will this force more homeowners to stay put? How does that help the housing inventory for first time buyers? Note, that the fees also apply to cash-out re-finance on high-balance loans so that's also going to hurt anyone hoping to take money out to expand their existing home.

Read more on a recent blog I posted on this topic.  https://emilybernardo.exprealt...