“A condo complex that would allow short-term vacation rentals in a beach or bay area sounds like a recipe for deterioration in the long run”
EconProf with all due respect I have to ask you if you really know what the heck you are talking about on this particular thread.
Show me a condo on Sail Bay that doesn’t have weekly rentals from Memorial Day to Labor day? In fact it is quite difficult to get any long term lease in any of these properties because they make tremendous sums of money when the zonies come.
Come on now, let’s try to stick with the real situation that the poster brought up okay? The fact of the matter.
How many times do we have to harp on the regional importance of real estate. Know your market, know your goals, know the prevailing conditions of THAT LOCAL SUBMARKET.
Josh, what I have seen is that indeed there is deterioration for the condos on Sail Bay that are used primarly as rental properties. I do not see any strong deviations from the secular conditions that affect PB as a whole. Simply stated, if you are looking for a possible investment property I would not treat the exercise any different then any other rental property exercise with respect to your goals of cash flow, verses long term appreciation. The only difference is that your income model will vary. You should assume two models, the 8-9 month fall/winter/spring timeframe where you either rent to students or professionals and the 3 month model where you rent to zonies. In order to get the best exposure you should list the rental with a local MB prop manager that has a large client base of Zonie renters.
The biggest challenge would be to project the returns which to be accurate should be largely based on prior years returns (good luck getting those from the prior owner).
Again though, at these prices even with some depreciation I doubt that the numbers will pencil out anywhere close to being a good investment. So I would not, not buy because of vacation renters, because if you know Sail Bay, that is EXACTLY what you want in the summer; I would not buy because I don’t think price levels are anywhere near what they need to be for cash flow. Cash flow numbers are much more realizable in other San Diego properties right now but even for those it is very tight.
