[quote=ctr70][quote=FormerSanDiegan]bread-and-butter Central San Diego rental areas:
Clairemont Mesa
Kearny Mesa
Mira Mesa
La Mesa
My rule of thumb is to look at the areas with “Mesa” in their name, and avoid places with the word “Barrio” or “Heights”)[/quote]
The very lowest end of those sfr markets you mention is $350k, how do you make that cash flow? And that $350k house probably needes $50k of work. I do not see that logic at all. $350k house, $2,000 rent? That is a total gamble on apprecation unless you put like 50% down.[/quote]
I would not buy unless/until I expect appreciation. The other approach is to buy the house as a primary (in some parts of these areas it is cheaper to own than rent at rates below 5%) and convert to a rental if/when you start seeing some appreciation.
As for 350K and 2K rent. That is certainly not a slam dunk, but it’s not a horrible entry point. And I don’t think we are there in broad swaths of these areas, yet.
With 20% down and a 30-year fixed rate of 4.75%, I come up with a total PITI of $1856. That puts you near break even cash flow if it rents for ~ 2000, depending on if you manage it yourself. I would also assume at least $100 per month in repairs or more.
Consider that you are paying over $350 per month towards principal in this example. If you make under $150K and can also get the depreciation tax break, that is not a bad situation … assuming that you can get some appreciation at some point.
If you bought something like that to occupy, it is likely cheaper than renting, as long as you can keep your Home Depot bill under $400 per month.
SO, buying in those areas today may not be a slam dunk. But I believe that owning a bread and butter rental in these areas is better long-term bet than the low end, cash flow areas.
