Rental property in San Diego vs Irvine

[scaredyclassic]

the rich plumber is kind of a cliche, but goshdarn, we were talking to this plumber who did some work in our house the other day, had a couple helpers, and his combined take home (he couldve been exagerrating but i doubt it) was greater than my househole income.

the bigger question is not which rental to buy, but why college?

maybe the money shoudl be put into starting a small business not for the poster, but the kids…

a real plan involves making kids selfsufficient.

[Coronita]

[quote=scaredyclassic]the rich plumber is kind of a cliche, but goshdarn, we were talking to this plumber who did some work in our house the other day, had a couple helpers, and his combined take home (he couldve been exagerrating but i doubt it) was greater than my househole income.

the bigger question is not which rental to buy, but why college?

maybe the money shoudl be put into starting a small business not for the poster, but the kids…

a real plan involves making kids selfsufficient.[/quote]

Actually, one of my neigbhors thatowns a dental practice says he’s seeing dental students that are graduating from dental school with $400-500k in student loan debt. Catch 22 is they won’t be able to have their own practice for some time since lenders won’t want to lend to them if they are already in the $400-500k hole… And working for another dentist won’t let them pay off that loan quickly either…

[scaredyclassic]

[quote=flu][quote=scaredyclassic]the rich plumber is kind of a cliche, but goshdarn, we were talking to this plumber who did some work in our house the other day, had a couple helpers, and his combined take home (he couldve been exagerrating but i doubt it) was greater than my househole income.

the bigger question is not which rental to buy, but why college?

maybe the money shoudl be put into starting a small business not for the poster, but the kids…

a real plan involves making kids selfsufficient.[/quote]

Actually, one of my neigbhors thatowns a dental practice says he’s seeing dental students that are graduating from dental school with $400-500k in student loan debt. Catch 22 is they won’t be able to have their own practice for some time since lenders won’t want to lend to them if they are already in the $400-500k hole… And working for another dentist won’t let them pay off that loan quickly either…[/quote]

Desperate dentists care recommendations seem suspect. There should be full financial disclosure for all dental practitioners.

[spdrun]

You keep saying it, so prove it.. 🙂

1. Name one property.

2. Why aren’t you doing it?

1. Look on the MLS yourself in the $100k-$250k range and run the numbers. You’ll find some.
2. I’m getting 8% plus on a property that I bought in SD last year. Right now, my lovely neighboring state of NJ is riddled with “fork-lost” (i.e. oh, FORK, I *lost* my home, waaaaaah-waaaaaah) properties, so I’m concentrating my search on future properties there. I’d rather get over 8% than 6-7%.

[The-Shoveler]

I saw a proposal to not allow any college tuition, and only have students repay by having 2% of their pay for life (after collage go to the college).

That way the college would not take students unless they could be reasonably assured their graduates would be able to earn a decent living.

In Germany I think they already outlawed college tuition.

[scaredyclassic]

2 percent!

[an]

[quote=scaredyclassic]the rich plumber is kind of a cliche, but goshdarn, we were talking to this plumber who did some work in our house the other day, had a couple helpers, and his combined take home (he couldve been exagerrating but i doubt it) was greater than my househole income.

the bigger question is not which rental to buy, but why college?

maybe the money shoudl be put into starting a small business not for the poster, but the kids…

a real plan involves making kids selfsufficient.[/quote]There’s a lot of risk and hard work to start your own business. It’s not easy and not many succeed in making your rich. I know many small biz owners. Many had many failed businesses before they found their successful ones. Some do find it on their first try but many don’t. It also require a lot more work than your standard 9-5 jobs. But of course, the ceiling is much higher for a small biz owners than a W-2 worker. There’s really no right or wrong answers. You can become wealthy as well being a W-2 earners. Just look at all the original Facebook employees or Instagram employees or Google employees or even Qualcomm’s employees. Bottom line is, just do what you love. Money is not everything.

[Coronita]

[quote=spdrun]

You keep saying it, so prove it.. 🙂

1. Name one property.

2. Why aren’t you doing it?

1. Look on the MLS yourself in the $100k-$250k range and run the numbers. You’ll find some.
2. I’m getting 8% plus on a property that I bought in SD last year. Right now, my lovely neighboring state of NJ is riddled with “fork-lost” (i.e. oh, FORK, I *lost* my home, waaaaaah-waaaaaah) properties, so I’m concentrating my search on future properties there. I’d rather get over 8% than 6-7%.[/quote]

Yeah, that was last year in SD. I was referring to this year. Show me one..And why aren’t you buying in NJ yet?

[spdrun]

I’m in the process of looking at properties in NJ, definitely buying this summer.

As far as locally to you, here’s one that went into contract recently:

http://www.sdlookup.com/MLS-140018287-202_Woodland_Pkwy_113_San_Marcos_CA_92069

Say they got full price of $140k.
Rent: $1100/mo
Insurance: $15/mo
Taxes: $140/mo
HOA: $260/mo

= 5.87% cap assuming you can keep it rented. Very close to 6%.

[an]

[quote=spdrun]I’m in the process of looking at properties in NJ, definitely buying this summer.

As far as locally to you, here’s one that went into contract recently:

http://www.sdlookup.com/MLS-140018287-202_Woodland_Pkwy_113_San_Marcos_CA_92069

Say they got full price of $140k.
Rent: $1100/mo
Insurance: $15/mo
Taxes: $140/mo
HOA: $260/mo

= 5.87% cap assuming you can keep it rented. Very close to 6%.[/quote]How did you come up with 5.87%? I thought cap rate is calculated as NOI/value of the place. Based on your number, NOI is ~$1200/year at best. $1200/140000=~0.857%. That’s assuming 100% occupancy and no maintenance. How did you come up with 5.87% cap rate?

Even when you’re talking about cash on cash ROI, $1200/28k down payment and you have 4.28% with the best assumptions. Something is not adding up.

[spdrun]

$1100 – $15 – $140 – $260 = $685/mo
$685/mo * 12 months = $8220/yr

$8220/$140000 = 5.87% cap rate.

If someone put down $100k cash and got a mortgage for the remainder ($200-250/mo), they’d be cash-flowing decently without much risk of being underwater. If they couldn’t get a small mortgage, a $100k loan would still allow for cash flow.

Try getting 5% or more return from a bank right now.

[Coronita]

[quote=scaredyclassic][quote=flu][quote=scaredyclassic]the rich plumber is kind of a cliche, but goshdarn, we were talking to this plumber who did some work in our house the other day, had a couple helpers, and his combined take home (he couldve been exagerrating but i doubt it) was greater than my househole income.

the bigger question is not which rental to buy, but why college?

maybe the money shoudl be put into starting a small business not for the poster, but the kids…

a real plan involves making kids selfsufficient.[/quote]

Actually, one of my neigbhors thatowns a dental practice says he’s seeing dental students that are graduating from dental school with $400-500k in student loan debt. Catch 22 is they won’t be able to have their own practice for some time since lenders won’t want to lend to them if they are already in the $400-500k hole… And working for another dentist won’t let them pay off that loan quickly either…[/quote]

Desperate dentists care recommendations seem suspect. There should be full financial disclosure for all dental practitioners.[/quote]

Speak of the devil…And no, my neighbor wasn’t quoting an article. It was actual dental grads applying for work at his practice.

http://finance.yahoo.com/news/520k-student-loans-where-start-113032209.html

[an]

[quote=spdrun]$1100 – $15 – $140 – $260 = $685/mo
$685/mo * 12 months = $8220/yr

$8220/$140000 = 5.87% cap rate.

If someone put down $100k cash and got a mortgage for the remainder ($200-250/mo), they’d be cash-flowing decently without much risk of being underwater. If they couldn’t get a small mortgage, a $100k loan would still allow for cash flow.

Try getting 5% or more return from a bank right now.[/quote]Very optimistic calculation. What about management cost (if you don’t want to manage it yourself), vacancy, maintenance? Then there’s are those who don’t want to put all $140k in 1 property or if they don’t have all $140k and they have to get a mortgage. All of those will eat away the 5.87% cap rate very quickly.

The OP only have $100k to invest, so you have to subtract $200/month due to 30 years mortgage on the remaining $40k. That alone will bring the cap rate down to 4.1%. If you add in vacancy & maintenance @ ~$100/month (I think this might be on the low side), your cap rate goes down to 3.3%. Add in $100/month for property management and you’re looking @ cap rate of 2.4%. @ that kind of return, you can get 5-7 years CD that pays you about that much without any of the potential headache that might arise being a landlord. Too much risk for too little return IMHO.

[spdrun]

$685 – 200 (mortgage) – 100 (maintenance/vacancy) = $385/mo = $4620/yr.

Cash invested = $100,000.

You’re still getting 4.6% return on the $100k, 2x that of your CD. As far as paying $100 for property management: it’s a good deal if you’re either mentally deficient or insane. Condos aren’t hard to manage yourself. Why would you want to pay some fecking parasite for the dubious service?

[sdsurfer]

I’ve often thought about Orange County vs. San Diego and ended up choosing SD just because I live here and wanted to give managing the property myself a shot.

My first condo was actually bought with the exact same intentions in mind. I was thinking that my son was a newborn and rents tend to go up in SD so if I can cash flow a little now then I’ll cash flow very well 18 years from now and optimistically use the cash flow to help pay for my sons education rather than selling the property. If I were the OP I’d spend less to get your feet wet on managing or even owning investment property just to limit my risk. Assuming it goes well then I’d think about making another investment. In my case it went very well and what started as one condo turned itself into another one with an ocean view through a refi on the original property and because we found another opportunity right here in North County.

It’s interesting because people always recommend SFR’s, but in my opinion a condo in a desireable area works too. If someone is looking to live in a particular area….they tend to look at all options in that area, not just SFR’s. The SFR’s rent for more, but they tend to cost much more too. I would think if one was thinking of appreciation then the SFR might be better in many instances, but I’m only looking for cash flow and to keep it rented forever as rents go up in the area. I personally just believe buying for appreciation to be a bit more tricky than buying for cash flow as rents increase over time. I love asking people what their rent was 10 years ago and it often blows my mind that what was expensive 10 years ago tends to be very cheap by todays standards.

Do some homework on both potential areas and decide for yourself which area is best for you. I wish you the best…Good luck!

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