[quote=bearishgurl]Ren, I don’t mean to be argumentative, but do you think TV is more of a “premium” location than North Park (5-10 mins. from dtn. SD on surface sts)? How much (%) premium (if any) should be attributed to a “craftsman-built” home that is still in original condition? And, do you think “coastal” neighborhoods in SD County are the only locations which are worthy of commanding a “premium?” Should properties in Imperial Beach command a premium?[/quote]
What I meant is, I wouldn’t consider North Park to be a premium location for the price. If prices were more reasonable (not necessarily as low as Temecula), maybe I would consider it. For other areas, it really depends on your needs and taste. I wouldn’t choose to live in Imperial Beach, but many others might love it.
[quote]Ren, do you think SFR’s (purchased in the last 15 years) in CA “coastal” areas will “break-even” as rentals? If not, do you think that they’re not worth buying because of this? Do you equate “size” or “square footage” with value or rental-rate?[/quote]
You have to look at individual properties, their purchase price, and local rental rates to determine that. It’s not easy for any property anywhere in San Diego county to be a good rental if purchased in the last 6 or 7 years. When you factor in long-term maintenance, which is a huge chunk (can be 30-40% of rent), they just don’t have positive cash flow. If it’s meant as a primary residence, then positive cash flow isn’t so important, but you would want to break even in case you had to rent it in an emergency.
[quote]Ren, do you pay 2% annually in “taxes” after adding your MR bonds to your 1.5% tax rate, or does your 1.5% rate also cover your MR bonds? In other words, is your annual tax bill on a property assessed at $250K $3,750 ($313 mo.) or closer to $5,000 ($417 mo.)? When you add your taxes, MR, fire ins. prem and $46 HOA fee to your monthly P&I, could you STILL break even if you were to find a tenant tomorrow and begin collecting rent on your current TV property? Moreover, if you retire to SD County and still have rental(s) in RIV Co., will you manage them yourself?[/quote]
Our total tax is 1.52%, so around $3,750. I don’t know how that’s broken down, my wife pays attention to that.
For rental properties in TV, I’m actually even more optimistic than TG. Our total payment, including everything you mentioned, is $1,450/month. After the tax benefit, which is even better for rentals (HOA and other maintenance is deductible), it’s closer to $1,150. Based on Craigslist ads for similar homes, it would rent for $1,600 if we charge a little below market. Figuring an average of 11 months/year occupied, which I think is conservative for the location, that’s an average of just over $300/month positive if we rented it out today. We would manage the properties ourselves, at first anyway.
Pick any property in Temecula that’s $250k-ish or less, and with 20% down, you’ll most likely have positive cash flow. A $300k property will still get you positive cash flow, but the return isn’t as good for the amount down. I think the sweet spot is condos and 3/2 sfr’s from $150k-200k. Our future investment properties will be in that sweet spot with 30%+ down, and so will have more positive cash flow.
[quote]Why is child care lower-priced in TV than SD? Don’t you have to leave your children for longer periods at daycare because of lengthy commutes?[/quote]
I imagine it’s lower because everything is lower – incomes, rents, etc. Child care is based on the number of days/week, and at least at our school, you can have the kids there for up to 10 hours before they charge you an extra $10/hour. We have to work it so that my wife drops them off and I pick them up. Our favorite teacher wants to quit and come be our nanny, and we’re seriously considering that, which would shave off another $500/month.
[quote]What’s your typical family gasoline bill? I live 10 mi. from dtn. SD (surface sts) and go there at least twice a week, along with numerous local errands and use about $80-$100 month or 2 – 2 1/2 tanks (if I don’t take any road trips). FWIW, I drive a luxury sedan.[/quote]
That’s hard to say – my wife is on maternity leave, and when she goes back, it will hopefully be 2-3 days/week with the rest spent at home. My gas depends on where I’m working, as I mainly do contract work either on site or at home. Assuming she’ll be a part time commuter to UTC and I’ll still be in Carlsbad, we’ll spend about $500/month on gas. We both have mid-size 4-bangers.
[quote]Ren, how much (%) lower would the “right price” be for SD County coastal zip codes? And how long do you think it will take the market to get there? Do you think the market on the “coast” will come down in price enough by the time you’re ready to buy a property to retire in?[/quote]
It’s the right price when the math works for your purposes (rental or primary residence). I’ve stopped trying to guess how much further it will drop or how long that will take. All I know is that coastal properties are overpriced today, maybe by 20%, and being artificially propped up. The reason I consider the coast a better long-term investment is because it will always be easier to rent out a property there, although I also don’t see Temecula deteriorating to the point where it would be difficult to rent out a property, either. If I was wealthy and prices were reasonable on the coast, that’s probably where I would buy. I’m not, and Temecula prices are reasonable now, so it’s currently a better investment.
