All Forum Posts by: Dan H.

@Dave Foster has the correct person. Michael Swan has been 1031 exchanging out of San Diego for a few years.  He has been converting to cash flow out of state properties.  He would likely have some lessons learned etc.  

good luck

I am pro San Diego REI. So if you want to live in San Diego I would recommend investing in San Diego. You may already know this but for virtually any investor duration of reasonable length San Diego is one of best return on REI in the nation. Does not matter if you use 10 years, 20 years, or 30 years as your duration.

I would look into house hacking a duplex with FHA loan. If you do not know the term house hack look it up on BP.

You will learn a lot, build equity, and be able to leverage the equity as you desire. 

Good luck. 

Our leases forbid subletting and even stipulate what qualifies as a house guest versus tenant.  So if one of my tenants did this he would get evicted and need to go to court to get deposit back as I would not refund it as tenant has prospered by breaking lease and placing property at a risk greater than what I was compensated  for. 

I think it is pretty standard lease language to not allow subletting. 

I do not agree with the rule #1 but not here to debate.

As I have indicated hopefully without insult I consider your plan to be higher risk than keeping granny in her current situation. 

Now for the help...   I apologize but I am poor at names but there is a poster on this site who is a teacher and I believe his wife is a teacher.  They did well in San Diego via appreciation but have been diversifying out if state for a few years via 1031 exchanges.  He indicates he has been very successful at this. Maybe someone better with names can provide his name or possibly search for San Diego and teacher.  

Good luck

To summarize her current property is worth a little over $400k and would net your granny $400k and you are looking where to invest that money.  

Note the property has returned over 1000% not including its cash flow or in excess of 20% a year not taking into account compounding.   Prop 13 results in ~$400/month savings.

The future is not known by anyone and better cash flow can be achieved easily in many parts of the country. However if using the past as an indicator her current investment would be very tough to beat. To ignore potential appreciation and rent appreciation can be a mistake. Note without including appreciation So Cal has been a poor RE investment but due to appreciation it has been the best REI in the nation (along with San Fran).

The point being cash flow is only part of what determines a good REI investment. Appreciation in recent years has been a larger factor.

@Justin R. provided good numbers (someone more conservative than I am on cap expense: I would have used $300/month)).  

Use those numbers versus risk in your decision. I invest in San Diego and therefore do not have an alternate area to recommend but will add that I am pro So Cal REI. Traditionally So Cal is tough to beat for REI total return.

There is no way I would consider an all cash offer with that margin.  If I could get conventional financing with that margin then I might go for it.  In fact that is about the margin I typically look for on my conventional financing offers.  I am an investor that does not need to make any additional purchases.  if a purchase does not have significant upside I do not do it as it is work to purchase a place, rehab a place, evict tenants, etc.  I think the work and risk is worth significantly more than the $10K type profit of the conservative estimate (which in rehab does not seem conservative).

I expect a much better return for all cash.   Maybe an offer of $330K would make it more tempting.

Also I suspect you will overrun your rehab costs but possibly under run elsewhere.  So maybe your end number may be fairly accurate.

Good luck

Cash positive is real tough to do on SFR in San Diego. On small multi units it is common to get cash positive in working class areas (Maybe B- areas and below). Nicer areas are unlikely to cash flow even with small multiplexes purchased at very good loan rates. My definition of cash positive takes into account cap expense (high in San Diego: I use $250/month for attached normal rental size and $300/month for detached), vacancy, standard maintenance, and any other expenses (I have 2 units I pay water and trash, 3 units I supplement the water, and 3 units I pay a gardener).

The market at its current price point versus rent is more of a property/rent appreciation play. Or it is a buy below ARV for an instant equity gain. Most of the properties below ARV have at a minimum extensive rehab and some have construction, etc.

This may sound like I am negative on San Diego REI but I am not. I believe the market will continue to appreciate and the rents will continue to appreciate and that if you invest you will get a solid return. However, cash flow will provide minimal return (the Cash flow is low enough that I feel is not worth the effort if there is no appreciation).

Good luck

I have never done this but I have looked into it a little bit. I looked at purchasing a SFR that was zoned for 4 units thinking it was a good value and that we would basically convert the SFR via construction to a quad. The issue was that even though the lot was zoned for up to 4 units with the current regulations there was no way to get 4 units without obtaining multiple variances.

Moral is to do your due diligence.  You may not be able to legally get a triplex there even though it is zoned for a triplex.  If this is the case you likely do not want to call attention to the fact that it is already a triplex.

The house I live in has a garage that was part of the initial house construction and therefore is permitted.  With the current regulations I could not build that garage in its current location if it was not already there.

Good luck.

@Pouria Rad

You can add me to the list of people to PM about the property.  I speciallize in 2 to 4 unit properties in inland North County.  I am almost complete with a rehab so the timing might be very good.

@Victor Jernigan

But you have to live in Tennessee LOL.  I am mostly joking as I have spent very little time in Tennessee but I have been in almost every state and I would choose no place in the US over San Diego.  Of course that is why the prices are very high per the income level in San Diego.  We call the discrepancy between income and property values the "Sunshine Tax".   The high real estate prices and appreciation have worked out pretty good for me so I should not be complaining about high real estate prices.  If they go higher I am in a great position.

I have a cousin who lives in Nashville.  He has had issues with employment but knoxville could be very different.

BTW $1M in some places in San Diego county would buy a very nice place.  In Jamul for example it would be able to have the land and close to the features of the properties you listed.  However, Jamul is hot in the summer, cold in the winter (cold for San Diego county), and slightly remote.  It is definitely not a hip location.