Supply/demand is simple economics. 

The pandemic and current economic situation is not making me feel any better about this either, but again, $5k in option fee security is worth over 3 months in rent.The other question I have for more experienced investors is should I be concerned that the appraisal came in right at the purchase price?

.· Borrower will neither seek nor accept future advances under any superior liens on the collateral securing thisLoan without the prior written consent of SBA.USE OF LOAN PROCEEDS· Borrower will use all the proceeds of this Loan solely as working capital to alleviate economic injury caused bydisaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform CommercialCode (UCC) lien filing fees and a third-party UCC handling charge of $100 which will be deducted from theLoan amount stated above.

I'd be looking for a mix of homeowners and renters, not a purely rental neighborhood.Don't get too caught up on the A/B/C/D "class" and focus more on the economics of the real estate market in each particularly neighborhood. 

That market is notoriously susceptible to broader market/economic fluctuations.

That's not to say that there isn't any opportunity, but you'll need to do a bit more digging into how the deal can withstand a second shutdown or any other sort of economic disaster.

So I view those as interconnected concerns.Bad debt is much more specific to your property and area.Depending on your area and property class, I'd get nervous to underwrite anything less than 10% economic vacancy (physical + other).

Population, Economic diversity, Average income, Average DOM for the area.

Great economic dynamics here.   

Based on that information, I would think San Diego would be less impacted economically than most areas of the country.