All Forum Posts by: Dan H.

I have not seen the posting for this Meetup and am interested in knowing the time and location in hopes that it can fit into my schedule (but I suspect it cannot).

Thanks

I have seen multiple times that due to some regulation the number of units the property is zoned for is not what the property can actually accommodate. There are increasing number of regulations, etc. that make it unusual to build to the zoning limit of a property. I know an investor that recently purchased a SFR that was zoned for up to 4 units. He wanted to put 4 units but he was only able to add a duplex to the SFR (so he got 3 units) and even that took some approved variances. I do not know the exact regulations that prevented the 4 units. I know of another property that was zoned for up to 4 units and the owner only was able to build a duplex (it had a duplex but they put in a high end duplex). The biggest hurdle to more units on this particular property was a mandatory parking per unit regulation. Kitty corner to this duplex is a double lot that has 8 units (4 units per lot) that was done prior to as severe parking regulations (my family owns the unit right next to this 8-plex and directly actross from the duplex). So even seeing a quad right next door does not imply that you can build that same quad today.

So I would be surprised if the property actually could have 15 units built on it. 

I think @Justin R knows his stuff so I think his rough cost estimate is likely close to accurate.

I consider it too high risk for any potential profit.

Good luck

My family and I have never flipped a property but we had a duplex in Gulf Shores Alabama.  It was hit by a couple of hurricanes and needed a lot of work (most units were condemned but our unit was not).  Managing the repairs from a far did not work for us.  We were always the lowest priority and had to take trips both times to ensure that our units were being worked. 

We loved those units in terms of they were unique that you walk down the front steps to be on the beach sand (the entire unit was on the beach) but financially they did not make sense to keep.  The property tax went up faster than the rents until the hurricanes.  Then there were periods of no rent and by the second hurricane they had lost a lot of their value (but of course no rebate given on the higher taxes we had paid).

The family still has a unit in Alabama (not beach front, it is on a lake) but we will be leery of purchasing out of state again.

This is what I do when I do a rent survey: I create a spread sheet that has columns for rent, BR, BA, parking spots (garage, car port, or just off street), yard, supplied Gardner, utilities covered, a notes column.   I typically start with Craigslist and search for rentals in Escondido filling out a row for each listing.  In the notes I place reasons why a prop is not a good comp as well as identifier info in hopes of avoiding counting the same property more than once.  I then do the same for Zillow and trulia.  In Escondido Craig's list has lower rents listed than Zillow or Trulia.   When I'm done I know the range of rents for comparable properties.  If your quad has no yard maybe apartments are fair comp but all of my units have a yard so I mostly try to exclude apartments from the comp and if I have to include them I do so discounting them because they have no yard.   The rent survey takes me over an hour and probably close to 2 hours.  If I have no turnover in a year I do about 2 rent surveys per year.  I of course do one every time I set rent upon tenant turnover; fortunately we do not have much tenant turnover. 

I did a quick look at CL.  Ramona has significantly less rentals than Escondido and apartments rents for 2 BR start at $800 ( this is about $400 less than Escondido - you cannot get a studio for $800 in Escondido).  The 2 BR apartments averaged about $1100 to $1200.  However there was only one 2 BR with a clearly identified yard.  It was $1700.  I suspect CL will be lower rent than Zillow or Trulia only because that is what I see in Escondido. 

Good luck. 

 If I purchased a $100k property (assume 25% down) in San Diego in 1970 it would very likely be worth well over $2.5M. My parent's first home purchased in 1969 with $2k down (10%: $19.5k value) is worth over $500k today and it is not in any area of exceptional appreciation (it was in East Chula Vista). Their second home purchased in 1977 for $72k (they put down less than $10k is worth over $700k today).  A property I purchased in 2012 for $300k is worth ~$600k today (I put 20% down). Each instance beats the S&P.  Between my RE and family RE  San Diego purchases we have 10 purchases and all were financed and all have significant better return than S&P for same duration as purchase duration. 

Arlen, it's in Ramona. Market is $1200 for nice units w a pool and carport or garage and a few more amenities. Mine are renting for $1050-1100 with more basic setup. I think I'm at or just below market on two but not a great deal.

Appraisal was from a bank, I see Escondido and spring valley units going around $700k that are similar.

Feel free to look for yourself it's 834 A St. Ramona, Ca

I claim to be an expert on Escondido duplexes to quads. I do rent surveys evert few months of Escondido properties. I did one one month ago for 2 BR units. The cheapest non apartment 2 BR in Escondido at that rent survey was $1700. I put ours on market at $1700 wanting to rent it as soon as it was ready. I had 3 tenants ready to move in when the unit was ready (1 did not pass our check so it went to the second). In Escondido studios go for over $1k. I do believe Ramona is lower than Escondido but I question how you did your rent survey? I think your rent is likely low but I do not claim expertise on Ramona rental market. If you have performed actual rent survey then you may be correct but if you have not actually looked at rent prices on Zillow, trulia, Craig's list I think you are low.

If you decide to sell, PM me ideally before committing commission to a realtor.  

Good luck

I do not know your definition of a tough market. My definition of a tough market is one that is difficult to obtain a decent ROI. San Diego historically has had a great ROI for buy and hold investors so I think it has been an easy market. clearly I think San Diego is a good to great RE market but I suggest you look up San Diego RE appreciation for any duration you desire and calculate the return assuming 25% down. Then realize sometimes a purchase requires less than 25% down. Finally realize rent appreciation typically correlates closely with property appreciation. In recent years rent has gone up $50 to $100 per month each year. So a buy n hold REI that barely cash flows could be cash flowing hundreds of dollars in a few years. Final bonus for California investors is prop 13 will ensure minimal property tax increase so as profits and value increase the taxes stay fairly flat. Virtually every buy n hold investor in San Diego that was able to not sell in the down cycle has had a great ROI no matter when they purchased the RE.

 The guys that throw it are active on BP and advertise the open house.  I suspect one of them will see this thread and post when the next event is if it has already been scheduled.  If that does not work one of my follow words is San Diego and it seems to catch virtually all of them as well as this thread.  Most of the time the events are scheduled a couple weeks out but the last one was much shorter notice.  

In other words I think it likely that someone will let you know the next event.  Maybe I will make it and we Powegians can meet.  I'm in North West Poway almost in RB. 

@Luis Alfaro There is a near montly on-site meetup run by @parker cox that you can meet some local people and learn a little.  There is no selling, just a knowledge exchange.

My answer to your question on best REI is that San Diego buy n hold has historically had a great return especially when the property has been financed. Look up San Diego RE appreciation over various durations to convince yourself of this. Calculate what the return is if the property was purchased with 25% down. Then realize that sometimes you can purchase with less than 25% down. Also realize that rent appreciation typically correlates with property appreciation. Add in the Prop 13 tax protection. There are very few investments (not just REI investments) that have returned the ROI of San Diego buy and hold RE investments. I suspect, even though you live here and know that properties appreciate, that you will be surprised by the historical return assuming 25% down.

Good luck.

@Anand S. I live in Poway, am an engineer, and invest local. I can make great a logical case for investing local (actually you could simply look for many of my past posts). I do admit your entry point finance wise would be a significant challenge but there are virtually zero markets that have a better ROI than San Diego for buy and hold purchasers. You were able to experience this on your initial Poway purchase that is now a rental. My claim is easy to verify as you can look up the appreciation on San Diego real Estate for a wide range of years and compare the appreciation to other markets and compare just the appreciation to what could be expected in cash flow in a better cash flow locale. Add in the cash flow and San Diego becomes even a better choice. Note a San Diego property that barely cash flows today is likely to be cash flowing by about $50 to $100/month more for each year of ownership.

I do not do flips but I have been to local investor Meetups on places that are being flipped and include some creative ideas t increase profit margin.  There is a group on BP that has nearly monthly Meetup in San Diego that you can learn quite a bit.  Every one of these that I have been to has been a flip (I understand they have had some that have not been flips but i did not attend those) and I have learned something at each one and I would have learned more if I was flipper.  There is no selling, just information exchange and donuts/coffee.  The following people are associated with it:

G. @Parker Cox.

I think you can learn something from attending some of these Meetups whether you choose to invest locally or go out of area.

Good luck.