All Forum Posts by: Stephen Bernard

Happy Friday!

In search of a San Diego Milspouse searching for a side hustle!

Who I'm hiring: a social media group manager

Description: A motivated and community-oriented individual to join our team as a Facebook Group Manager for "The PCS to San Diego Family!" This role is specifically open to military spouses who understand the unique challenges and needs of military families. As the Group Manager, you will be responsible for posting engaging content regularly, fostering community interaction, and managing group members. This position offers an excellent opportunity to contribute to a growing online community and establish connections. Join us and help military families thrive during their PCS to San Diego!

Expected time commitment: 3-4 hours/week

Pay: Unbounded. Start at $50 per week, auto to $100 per week after a growth threshold is reached. Then, 5% raises after each month-over-month growth rate of 15%.

To apply: submit a 15-60 second tik tok/reel that you made, describing why you are a great candidate to any of the social media inboxes found at: https://linktr.ee/SanDiegoStev... !

Expected start date: 3 July (flexible)

Doing some business pivots in the area, and want to seek some legal counsel, contract writing, etc. Any recommendations for an investor friendly RE attorney? 

@Donald E Appleberry is one of the best in town! Glad the deal worked out for you!

 @Ngozi Iwunze it really depends on your goals and budget! If it's your first investment, there's no harm in starting small. Many BP podcasts talk about investors beginning with the rent-by-the-room strategy, which works in every property-- condo on up!

That said, your VA entitlement can help finance the purchase of a small multifamily property. Here's a useful article on how the house hack is such a powerful tool for beginners: https://pcstosandiego.com/the-...

I hope this helps!

 @David Codelli I would also caveat that if you were to consider option 2, you should do it with a local firm rather a big-name with a ridiculous marketing budget. You'll be covered in fees before you know it and just another cog for them to churn; a boutique business experience will help you get the maximum value with the minimum headache. I've worked with a good one in San Diego if you need a recommendation!

@David Codelli I feel for you! It happens, eventually, to every investor. 

Option 1: Rents are poised to skyrocket throughout Southern California. I have several past and current clients in the Temecula/Murrieta area- so I'm familiar with the market, enough to believe in its continue potential for growth. Prices there, due to accessibility to the military bases around the county, already matched those in San Diego proper; whereas Murrieta and Temecula originally served as relief valves to the high prices of San Diego. 

PROS: you raise rents $500, you might increase your cash flow, and you might have your tenants elect to not renew anyway. 

CONS: If you lose your current tenants, you have to find a replacement. 

Conclusion: Option 1 is a win-win for long term buy and hold, it's easy to find new tenants (in the worst case of your situation) or you get to create a new contract with stronger and better terms for you. I think this option de facto similar to option 3. 

Option 2: You probably have some stellar equity in the property, and it's still a great time to take advantage of that. With real estate prevalently run by principles of supply and demand,  the current value of your home isn't going anywhere. If anything, it will continue to appreciate although at a margin of what you've seen over the last several years. As rates rise, less buyers are in the market; but those that are, are typically better qualified and stronger. As such, if you were to consider taking it to market I'd caveat that you might be prepared to make concessions. 'As-Is' and off market is a way to save some heartache. 

In my opinion, we are on the precipice of a shift that will open opportunities to investors by discouraging normal competition. I think you should turn "one door" (your current sfh) into "two" or more doors; taking the equity out of this property and inserting it into a new investment in San Diego.

Pros: rid yourself of your current tenant woes and repair expenses, step up in your investment portfolio by buying a small multi-family, increase your cash flow

Cons: Liquidating an asset is always a tough call and feeling

Conclusion: This is a great play if you are looking to ramp up your investment strategy. Some investors like the 10 units they own and want to own them until they're all paid off. Others will use each of those 10 units as a stepping stone to 20 units etc. etc. It comes down to your personal goals and desires!

I hope this provided value to you! I appreciated thinking about the situation.

Hey @Giovanna Leyva!

I recommend finding a good investor-minded agent first, they typically bring with them a team of people that can help make your first transaction a success. Now, a lender and an agent SHOULD be working hand-in-hand. A lot happens behind-the-scenes, so the established relationship there is paramount to smooth communication and an efficient transaction between the buyer and the seller. Your team makes all the difference.

All that said, when you find an agent first, you will do an initial consultation. This is where you'd outline your vision, and we'd set the goal for the transaction; consider it the "what." Then, you go through the preapproval process and the lender will anchor that vision in reality, consider it the "how"; if we don't have what we need, a good one will give you the pathway to achieving your vision. Then, the REALTOR will take over again and you'd do the fun part- house hunting!

The transaction will go through phases of back and forth between the lender and the agent while they are servicing the client,  and the realtor should be communicating with the lender every time they and the client step into a home!

Hope this helps, feel free to reach out with any more questions!

@Yosef Itav Congrats on the forward planning! It's great to think down the line. I wanted to echo what @Dan H. said and offer some additional insight.

2020/2021 has been incredible for homeowner's equity, to the sum of a 20%+ gain in value. Definitely not typical and attributable to a number of the markets current drivers (namely, low interest rates) causing bidding wars on every house that hits the market. As the frenzy calms, you can expect two things: 

1.Homeowners can rest easy knowing appreciation will still rise 5%+ year over year. There is a fundamental supply shortage that has not been addressed. This past year zoning was actually eased across the county to encourage developers to construct larger multi-unit properties in an effort to meet demand. Again, owners of single family detached homes get the big win. A recent study by porch projects another spike in SD's median home price to the number of 24% which will price it at about $1 million!

2. There is an inevitable increase of interest rates on the horizon. First time home buyers are going to be priced out of affordable housing. The following scenario is based on the purchase of a $600,000 home in SD (below the median home price) 

-at 2%: Monthly PITI is roughly $3200

-at 3%: Monthly PITI is roughly $3500

-at 4%: Monthly PITI is roughly $3800

To place that into consumer perspective, a military E-7 (a relatively senior Non-commissioned Officer) receives an allowance of $3225 per month for housing. Anything above that is paid out of pocket. They are in a relatively privaleged position while buying due to the powerful opportunity of the VA loan. But, with nominal increases in interest rates, even they can't afford to buy. The fed expects to begin interest rate hikes as early as Q3 FY22.

All that to say, buying and holding in this market yields massive advantages. Even though, short term, you don't cashflow here and now, it doesn't mean that buy and hold is a bad idea. Markets across the country are in a similar position, where the 2% rule simply doesn't exist as it once did. Even the 1% rule is hard to come buy. In my opinion, if you have the means to buy and hold now, you should. Now, why San Diego over another, cheaper, market? Simply, your gain in appreciation and loan paydown is astronomically different in this market than others. Where, in [insert name here] Indiana, you may gain $100 in equity every month through loan paydown, you get that number in thousands in San Diego. Moreover, as the buyers dwindle due to lower purchasing power, you can expect market rates to increase. Anecdotally, my friend was renting his downtown apartment for $2800/mo. He received orders, and ended his lease. The next month, the PMs had placed the unit for rent for $4000 and received 15 applications the first day. 

Although the cashflow isn't immediate, it is a medium-to-long-term guarantee. Through appreciation and loan pay down, the impact to your overall net worth is far more positive in San Diego than in competing, more 'affordable', markets. 

Hey Kevin! Great question, I'm glad you've enjoyed your visits to San Diego. 

The business first. San Diego, like many cities across the country (now), just passed some legislation on short term rentals. Neither here, nor there, but localities nationwide are making rules that attempt to preserve home ownership by residents-- which ultimately hurts investors. Now, the rule in San Diego isn't as bad as other places (that require local agents and in-person attendance at city council meetings) in that they only require that you obtain a short term rental license and pay some business tax. Here's a link to the BLUF (bottom line, up front) page from the city treasury that explains different tiers to this system, as well as a link to their preliminary system for license application. As of this writing, the license itself is called a Transient Occupancy Tax Certificate (TOT). Here's a link to the TOT info page. Here's a link to the FAQ on that page which may answer some initial questions on the legislation. 

Now, the fun part. The attractions to San Diego are many, from the amazing nightlife and frequent festivals/events, to the beaches. Most every event is located in the downtown area, and the nightlife is centered around the Gaslamp district which is right in the center of the city. So, location, location, location. Apartments/condos downtown are amazing for that centrality. Now, there are a few primary beaches in SD and they include; La Jolla Shores, La Jolla Cove, Pacific Beach, Mission Beach, Mission Bay, Silver Strand Beach, Glorietta Bay, and Imperial Beach. Each surrounding community is great, but they offer drastically different cultures. Places like Pacific Beach and Mission Beach would be prime for a small multifamily buy. San Diego is a commuter city. So, as you go up the 5 (N/S) or the 8 (E/W) you run into awesome, more suburban communities again with their own microculture. They are places like Chula Vista/Otay (Which have tons of new construction) and the SDSU college area among others. That's where you'll find your SFH buys, but they come with the 15 min+ drive time to the attractions. The metro here is a good option for commuting, but stations get fewer and far-er between as you venture outside the city. To briefly comment on Adam's reply above; Oceanside and Carlsbad are good suburban areas that have their eclectic beach community charms (along with del mar for that matter), but they come at the cost of truly being farther away from what makes San Diego Shine. Oceanside is the town right by MCB Camp Pendleton, so there is a very high marine presence there which makes it prime for long buy-and-holds. Carlsbad is charming, but highly suburban. You're talking about a 45- and 30-min drive to downtown (and the major beaches), respectively.

I hope this is a good primer for your location question! PM me if you'd like to dive deeper into any of these areas, or set up a time for a call if you have more questions.

@Jacob Murphy dm sent