Best neighborhood to BUY a rental property in San Diego?

[Diego Mamani]

[quote=Nor-LA-SD-guy][quote=Diego Mamani]

after 15 years of paying P&I, repairs, etc., you sell for no more than what you paid.[/quote]

Although that has happened in a few area’s/cases in this current downturn in SD and T.V., I would consider that extremely unlikely in the next fifteen years for most of SD or the Temecula valley.

And the fact that has happen during this downturn should give you an Idea where the cash flow deals are…[/quote]

Nor-Guy: I essentially agree with you. I think that places like the IE will have higher prices in 2020 than in 2009. But that’s only our educated guess, we can’t tell for sure. The point I’m trying to make is that when making an investment we need to make conservative assumptions, and also consider “what if” scenarios, even very pessimistic ones.

[carlsbadworker]

[quote=temeculaguy]Fear is good for the investor, if you are scared, buy a dog. If it was so easy a caveman could do it, then he would.[/quote]

This is classic!

[carlsbadworker]

[quote=temeculaguy]Fear is good for the investor, if you are scared, buy a dog. If it was so easy a caveman could do it, then he would.[/quote]

This is classic!

[carlsbadworker]

[quote=temeculaguy]Fear is good for the investor, if you are scared, buy a dog. If it was so easy a caveman could do it, then he would.[/quote]

This is classic!

[carlsbadworker]

[quote=temeculaguy]Fear is good for the investor, if you are scared, buy a dog. If it was so easy a caveman could do it, then he would.[/quote]

This is classic!

[carlsbadworker]

[quote=temeculaguy]Fear is good for the investor, if you are scared, buy a dog. If it was so easy a caveman could do it, then he would.[/quote]

This is classic!

[carlsbadworker]

[quote=temeculaguy]But yeah, there are lots of knuckleheads with suitcases full of money showing up trying to buy investment properties here, they’ve been coming for a while and screwing up my plans to rule the world. I battled with them last year when buying the primary and i’ll battle with them when the rental aquisition time comes, they seem to take the winter off, so postpone your visit about 6-8 weeks, use the time to study things and maybe they will leave again until february. [/quote]

I do think the sale will decline again in winter but where is the flood of REO that has been promised again and again? I start to wonder about it when I find that even RE agent in my community newsletter starts to use the word “shadow inventory”.
I am not planning to buy a rental property in near term any way. I still think that equity market holds more promise than the property market in near term. I am in the same camp as peterb on this. I will time my purchase of rental property only when there is hope for significant price appreciation, even though it means I will pay a bigger price tag. Rental yield itself looks less attractive to me than the stock dividend, considering all the work that must go along with it.

[carlsbadworker]

[quote=temeculaguy]But yeah, there are lots of knuckleheads with suitcases full of money showing up trying to buy investment properties here, they’ve been coming for a while and screwing up my plans to rule the world. I battled with them last year when buying the primary and i’ll battle with them when the rental aquisition time comes, they seem to take the winter off, so postpone your visit about 6-8 weeks, use the time to study things and maybe they will leave again until february. [/quote]

I do think the sale will decline again in winter but where is the flood of REO that has been promised again and again? I start to wonder about it when I find that even RE agent in my community newsletter starts to use the word “shadow inventory”.
I am not planning to buy a rental property in near term any way. I still think that equity market holds more promise than the property market in near term. I am in the same camp as peterb on this. I will time my purchase of rental property only when there is hope for significant price appreciation, even though it means I will pay a bigger price tag. Rental yield itself looks less attractive to me than the stock dividend, considering all the work that must go along with it.

[carlsbadworker]

[quote=temeculaguy]But yeah, there are lots of knuckleheads with suitcases full of money showing up trying to buy investment properties here, they’ve been coming for a while and screwing up my plans to rule the world. I battled with them last year when buying the primary and i’ll battle with them when the rental aquisition time comes, they seem to take the winter off, so postpone your visit about 6-8 weeks, use the time to study things and maybe they will leave again until february. [/quote]

I do think the sale will decline again in winter but where is the flood of REO that has been promised again and again? I start to wonder about it when I find that even RE agent in my community newsletter starts to use the word “shadow inventory”.
I am not planning to buy a rental property in near term any way. I still think that equity market holds more promise than the property market in near term. I am in the same camp as peterb on this. I will time my purchase of rental property only when there is hope for significant price appreciation, even though it means I will pay a bigger price tag. Rental yield itself looks less attractive to me than the stock dividend, considering all the work that must go along with it.

[carlsbadworker]

[quote=temeculaguy]But yeah, there are lots of knuckleheads with suitcases full of money showing up trying to buy investment properties here, they’ve been coming for a while and screwing up my plans to rule the world. I battled with them last year when buying the primary and i’ll battle with them when the rental aquisition time comes, they seem to take the winter off, so postpone your visit about 6-8 weeks, use the time to study things and maybe they will leave again until february. [/quote]

I do think the sale will decline again in winter but where is the flood of REO that has been promised again and again? I start to wonder about it when I find that even RE agent in my community newsletter starts to use the word “shadow inventory”.
I am not planning to buy a rental property in near term any way. I still think that equity market holds more promise than the property market in near term. I am in the same camp as peterb on this. I will time my purchase of rental property only when there is hope for significant price appreciation, even though it means I will pay a bigger price tag. Rental yield itself looks less attractive to me than the stock dividend, considering all the work that must go along with it.

[carlsbadworker]

[quote=temeculaguy]But yeah, there are lots of knuckleheads with suitcases full of money showing up trying to buy investment properties here, they’ve been coming for a while and screwing up my plans to rule the world. I battled with them last year when buying the primary and i’ll battle with them when the rental aquisition time comes, they seem to take the winter off, so postpone your visit about 6-8 weeks, use the time to study things and maybe they will leave again until february. [/quote]

I do think the sale will decline again in winter but where is the flood of REO that has been promised again and again? I start to wonder about it when I find that even RE agent in my community newsletter starts to use the word “shadow inventory”.
I am not planning to buy a rental property in near term any way. I still think that equity market holds more promise than the property market in near term. I am in the same camp as peterb on this. I will time my purchase of rental property only when there is hope for significant price appreciation, even though it means I will pay a bigger price tag. Rental yield itself looks less attractive to me than the stock dividend, considering all the work that must go along with it.

[ctr70]

[quote=FormerSanDiegan][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.[/quote]

#1 you could not get 4.75% on an investment property. You would have to put 25% down to get probably a 5.25% rate if you were lucky, 20% you would be at 5.75%.

#2 $350k is the very bottom of those neighborhoods you mention. It is often a smaller super fixer property at that price that may take $20k+ just to make it rent ready. And that smaller low end of the market house is probably closer to a $1,600-$1,700 rent than $2,000.

#3 On those old properties there is a ton of maintainance. Probably adds to more like $175-$200/mo maintainance.

…so to buy a rental house in one of those neighborhoods you would have to put down almost $90,000 + put another $20,000 to fix it up, just to have an investment that is $300 or more negative cash flow a month. That does not seem like a great return on you cash to me.

[ctr70]

[quote=FormerSanDiegan][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.[/quote]

#1 you could not get 4.75% on an investment property. You would have to put 25% down to get probably a 5.25% rate if you were lucky, 20% you would be at 5.75%.

#2 $350k is the very bottom of those neighborhoods you mention. It is often a smaller super fixer property at that price that may take $20k+ just to make it rent ready. And that smaller low end of the market house is probably closer to a $1,600-$1,700 rent than $2,000.

#3 On those old properties there is a ton of maintainance. Probably adds to more like $175-$200/mo maintainance.

…so to buy a rental house in one of those neighborhoods you would have to put down almost $90,000 + put another $20,000 to fix it up, just to have an investment that is $300 or more negative cash flow a month. That does not seem like a great return on you cash to me.

[ctr70]

[quote=FormerSanDiegan][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.[/quote]

#1 you could not get 4.75% on an investment property. You would have to put 25% down to get probably a 5.25% rate if you were lucky, 20% you would be at 5.75%.

#2 $350k is the very bottom of those neighborhoods you mention. It is often a smaller super fixer property at that price that may take $20k+ just to make it rent ready. And that smaller low end of the market house is probably closer to a $1,600-$1,700 rent than $2,000.

#3 On those old properties there is a ton of maintainance. Probably adds to more like $175-$200/mo maintainance.

…so to buy a rental house in one of those neighborhoods you would have to put down almost $90,000 + put another $20,000 to fix it up, just to have an investment that is $300 or more negative cash flow a month. That does not seem like a great return on you cash to me.

[ctr70]

[quote=FormerSanDiegan][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.[/quote]

#1 you could not get 4.75% on an investment property. You would have to put 25% down to get probably a 5.25% rate if you were lucky, 20% you would be at 5.75%.

#2 $350k is the very bottom of those neighborhoods you mention. It is often a smaller super fixer property at that price that may take $20k+ just to make it rent ready. And that smaller low end of the market house is probably closer to a $1,600-$1,700 rent than $2,000.

#3 On those old properties there is a ton of maintainance. Probably adds to more like $175-$200/mo maintainance.

…so to buy a rental house in one of those neighborhoods you would have to put down almost $90,000 + put another $20,000 to fix it up, just to have an investment that is $300 or more negative cash flow a month. That does not seem like a great return on you cash to me.

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