All Forum Posts by: Madison Carlson

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BiggerPockets Wants To Feature Your Cash Flowing Property (google.com)

Hi Stacy,

Are you familiar with the new Senate Bill 9 in California? 

This bill was recently put into effect to develop solutions that address Californias housing crisis.

In short, this streamlines the process for you to subdivide an existing lot. The parcel must meet specific qualifications. SB9 allows no more than 4 units on what is currently a single-family parcel. There is an owner occupancy requirement, which requires homeowners to live in one of the units for 3 years from the time of approval for the lot split. SB9 offers a ministerial, non-discretionary permitting process, meaning planning staff can issue it without it needed to go to the planning commission. The goal is to make the process easier, and similar to the process of attaining an ADU permit if you're eligible.

The lot requirements are:

-Must be an Urban lot and Single-Family Zone

-Cannot be in a historic district or on a historic registry of property

-Lots must be roughly a 50/50 split and you can go up to 40/60 split. 

-Both lots must have access to the street (public right away).

-No lot can be smaller than 1,200 sq. ft.

Given your specific situation and position this would be a great option for you. I would recommend putting as little down as possible and using the extra funds to subdivide the lot using SB9. It will take patience with the process, likely some hurdles, and you will need cash for professional fees. But would allow a profitable exit if the cash flow isn't where you want it to be when you plan to move. 

I would be happy to send some options in the areas/price points you're targeting?

Likely no inheritance tax but there is an estate tax maximum. Although you do want to consider that your property tax will be reassessed at the fair market value from the date of inheritance as a result to Prop 19. Feel free to reach out for further information!

Hi Luis,

I would explore the idea of hiring a property manager that specializes in managing your specific property type. Having an expert that has the network and resources is important when operating a successful rental. Especially with the changes in the San Diego market, specifically the new short term rental ordinance it is important to be knowledgeable in potential conflicts/obstacles that could arise. 

Hi Arthur,

I have used a handful of different CRMs. All have different features and various advantages vs. disadvantages. My top 3 depending on the components you are looking for would be Salesforce, Trello, and Active Campaign. 

Hi Lisa,

My brokerage specializes in buy/sell residential, investment real estate, short term rentals, and property management! I work on a team with the managing brokers at Class Realty Group. Personally, they own 4 units in Mission Beach (3 short term rentals and 1 office space) as well as we manage 20+ rental properties for clients. They just recently flipped a duplex near Torrey Pines & Del Mar adding 2 ADU's on the property. They recently rented out both units, 1 unit as a long-term rental and the other as a short-term rental.

Therefore, we have kept a close watch on STRO in San Diego. A few concerns we have are:

• What are my chances of getting a Tier 3 (Pacific Beach) or Tier 4 (Mission Beach) License for short term rentals?

• Will the reduction of short-term rentals increase rental inventory so much that long term rents go down and vacancy increases significantly?
• Will those that do not get a license choose to sell all at one time in an already cooling/uncertain real estate market?

Although we don't have all the answers, we have spent quite a bit of time analyzing the data provided by the City of San Diego and would be happy to share the insights with you! Hope this was somewhat helpful and would be happy to connect and chat more!

Published STRO Implementation timeline:

• October 3rd, 2022 – Application Period Opens for all STRO license Tiers
• November 30th, 2022 – Tier 3 & Tier 4 License Period Closes
• December 16th, 2022 – Lottery conducted & hosts notified of the results
• January 6th, 2023 – Tier 3 & Tier 4 License Fees Due
• May 1st, 2023 – STRO Ordinance Implementation Date

Many likely have concerns about the impact of upcoming STRO (Short Term Residential Occupancy) Ordinance in San Diego and how it will affect rents/values.
I work on a team with the Managing Brokers at Class Realty Group. Our Real Estate Brokerage specializes in residential real estate, property management, short term rentals, and investment real estate. Personally, my Managing Brokers own 4 units in Mission Beach as well as we manage 20+ rental properties for clients in San Diego. 

Recently we were provided the STRO Implementation Timeline!

The updates include:

• Published STRO Implementation timeline:

• October 3rd, 2022 – Application Period Opens for all STRO license Tiers
• November 30th, 2022 – Tier 3 & Tier 4 License Period Closes
• December 16th, 2022 – Lottery conducted & hosts notified of the results
• January 6th, 2023 – Tier 3 & Tier 4 License Fees Due
• May 1st, 2023 – STRO Ordinance Implementation Date

A few things we have been concerned about and are preparing accordingly for are:

What are our chances of getting a Tier 3 (Pacific Beach) or Tier 4 (Mission Beach) License for short term rentals?

Will the reduction of short-term rentals increase rental inventory so much that long term rents go down and vacancy increases significantly?

Will those that do not get a license choose to sell all at one time in an already cooling/uncertain real estate market?

Although we don't have all the answers, we have spent quite a bit of time analyzing the data provided by the City of San Diego. 

Curious of others thoughts, concerns, and strategies for STRO Implementation? 

Hi Lisa,

Many have concerns about the impact the upcoming STRO (Short Term Residential Occupancy) Ordinance in San Diego will have on rents/values.

The STRO webpage was recently updated. The updates include:

• Published STRO Implementation timeline:

• October 3rd, 2022 – Application Period Opens for all STRO license Tiers
• November 30th, 2022 – Tier 3 & Tier 4 License Period Closes
• December 16th, 2022 – Lottery conducted & hosts notified of the results
• January 6th, 2023 – Tier 3 & Tier 4 License Fees Due
• May 1st, 2023 – STRO Ordinance Implementation Date

I work on a team with the managing brokers at Class Realty Group. Personally, they own 4 units in Mission Beach as well as we manage 20+ rental properties for clients. Therefore, we have kept a close watch on STRO in San Diego. A few concerns we have are:

• What are my chances of getting a Tier 3 (Pacific Beach) or Tier 4 (Mission Beach) License for short term rentals?

• Will the reduction of short-term rentals increase rental inventory so much that long term rents go down and vacancy increases significantly?
• Will those that do not get a license choose to sell all at one time in an already cooling/uncertain real estate market?

Although we don't have all the answers, we have spent quite a bit of time analyzing the data provided by the City of San Diego and would be happy to share the insights with you! Hope this was somewhat helpful and would be happy to connect and chat more!

There is no simple answer to this question without analyzing the performance of your current holding (s) from a return on invested capital/equity standpoint. From there, options can be evaluated to see if there are areas where improvements (higher returns) can be attained in the current market. Many variables come into play including appreciation, rental permits,  using your financing as a vehicle (looking at your current interest rate verses refinancing to pull cash for additional investment. 

Your long-term, Real Estate Investment success (cash-flow, income-tax benefits and capital equity growth) depends on knowing how you properly manage your investments between the years in which you buy and sell. These “uneventful” years, without any sort of income-generating transaction-based activity (sell, buy, or refinance) may in fact be the most important.

Recognizing the importance of proactive asset management and timely strategic adjustments during your "holding" time is crucial. Many brokers/agents who are “brokerage-focused" (transaction) may tell you to sell before running the numbers and performing proper valuations/analysis to create a tailored strategy specific to your condo's performance. 

Hi John,

Seems like you are in a great position here. My brokerage specializes in residential real estate, property management and short/long term rentals. We are still primarily in a sellers market. You are in a position where you have an advantage with both approaches selling or renting. Although I would be curious to run some projections for a potential rental opportunity. With your current 2.75% interest rate, that puts you in an ideal position to optimize on rental revenue opportunities. Although rates have slowly dropped and are now in the low-sub 5%, can't really beat that 2.75% rate... 2022 projections anticipate rental increases as high as 9.1%, and with your low interest rate you could see some great cash flow by renting. Not to mention the appreciation aspect and upside with your property value increasing. San Diego is currently landlord friendly with no local rent control, although this could change in the future with talk of permit changes and regulations. Happy to connect and talk more about various strategies and opportunities!