GZZ’s Goodbye to SD

[gzz]

Unlike EconProf, I don’t especially want to leave and have a high opinion of SD.

Nonetheless, for a variety of reasons I am relocating, and I have to say I am excited.

Like EconProf, I think California is horribly misgoverned. Unlike him, I think it probably will muddle through given all the unique blessings it has. As Adam Smith said to those predicting disaster as Britain was losing the American Revolutionary War: “There is a great deal of ruin in the nation.”

I have decided, however, to sell 2 of my 4 rentals because what I see here in the Midwest is greater economic dynamism, better governance, and most importantly better cap rates.

It’s really quite crazy to see how high rents are here right now. No, they are not at California levels. But rents in small town Midwest in 2024 are comparable to what they were in San Diego in 2015. It is kind of shocking to see run of the mill 2/2 apartments renting for 1800/mo in the middle of nowhere, higher than I paid in San Diego 12 years ago, but that’s the situation.

What hasn’t caught up, however, are selling prices. They are certainly rising fast, but nothing like the absurd, crazy, unbelievable increases in rents.

There’s also the issue of “where do I want to be a landlord?”

My experience as an east county landlord sucked. Lots of high income people in east county, but they all buy, not rent. Landlording in OB spoiled me, high income SF transplants arrive in OB every day. While I have thus far avoiding the disasters some California landlords have suffered, I know, in person, people who have suffered massively because of California’s awful anti-landlord laws. I do plan to keep my two oldest, sub-3% mortgage beach rentals forever.

[Coronita]

Best wishes for you GZZ. Sorry things didn’t work out for you out here.

I count myself lucky, because most of my rentals stayed in North County so *knock on wood* so far my rentals have been almost fully occupied, with my last condo being vacant 3 weeks due to some minor remodeling, but new tenant moved in with a lease 20% higher than previous one that moved out because they bought their own place.

I retired from tech last December, and I don’t have any plans to relocate out of SD so far.. My kid goes off to college in Fall of this year.. fortunately, I didn’t molest my kid’s 529 college account and custodial account too much, so surprisingly it did better than I expected, so they will be able go out of state up to 6 years including grad school without taking out a student loan. I was a little paranoid about my finances retiring early, but after going through the numbers ad-nausem with my financial planner, he assured me that even if I am unfortunate enough to live until I’m 90 (god please no), I won’t run out of money and end up with a surplus. So for the time being I’m staying here. Maybe that will change depending on where my kid finally ends up post college.

Financial Planner did recommend I stopped trying to day trade, lol, and to think twice about buying any more cars, lol.

It was a little weird and unsettling not working for the first few weeks. But I think I’ve found time to keep myself busy…  I’ve been spending my free time volunteering at my kid’s robotics team and taking some autoshop classes, classes that I always wanted to take but never had time and that were taboo to take in my culture growing up…  I’m hoping to get my CA Smog Inspector License in a few weeks, just so I know the in’s and out’s of our Smog program… heh heh.  Both have been sucking al ot of time, more than I thought it would. I’ve been meaning to do more track days at Thermal, but too many scheduling conflicts, lol.

[Coronita]

BTW: I think you did extremely well GZZ in OB. That’s a huge win. Like my friends terll me all the time, can’t win them all, and I had my fair share of losses elsewhere. Whatever our reasons for moving etc, it’s all good. There are parts of the US I wouldn’t mind going to myself. But I’m default lazy, so it’s hard for me to motivate. I’m kinda jealous of people who have more mobility at times!

[sdrealtor]

Sorry things havent worked out as you hoped and hopefully everything is ok with the family. Glad you recognize how good SD has been to you and will hold onto a couple beach rentals. I think those will serve you well and perhaps some day you will return. Holding onto those ensures that will always be a possibility for you and your family.

There will always be strong demand by the beach from high income individuals that don’t see themselves here long term. Unfortunately you seemed to have learned the hard lesson that reality doesn’t hold in East County. I’m sure its a big note and at much higher rates so better to cut your losses sooner than later rather than doubling down.

Also try not to forget what you learned in East County when you invest back in the Midwest. Rents and cap rates may look great in some spots but don’t forget the importance of tenant quality. Its better to sacrifice some return for sanity and peace of mind. Look for the sweet spots that balance both.

One last thing and a good reason to hold onto those OB props is places can look great as a visitor but different as a resident and your stay there could hit bumps also. Despite everything we put up with here we enjoy a great deal of social tolerance among our neighbors and a well educated populace. My good friend from Nashville always laughs when Conservative Californians move there to be his neighbor in Franklin where his family has been for generations. Its a nice upscale place but they quickly learn when they venture a little further out they don’t only live in Nashville, they also live in Tennessee. Those are two very different things

Hope everything turns out the way you want and dont be stranger. We’d love to hear of your successes there

[Author]

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