[ctr70]

I’m looking more in the better North Park areas and Univ Heights. I’ve noticed some normal buyers who bought conversions in later 2008 are already able to sell with enough equity to pay the Realtor commission AND walk away with some cash. So the prices have risen a fair amount in some cases in the better areas since late 2008. Even the 1 bedroom conversions in better areas where I’m looking get hammered with multiple offers as soon as they hit the MLS and a lot of cash buyers.

Could you hire an inspector that would be able to look under the hood of a condo project? I would imagine that is not as simple as a single family home inspection.

[ctr70]

I’m looking more in the better North Park areas and Univ Heights. I’ve noticed some normal buyers who bought conversions in later 2008 are already able to sell with enough equity to pay the Realtor commission AND walk away with some cash. So the prices have risen a fair amount in some cases in the better areas since late 2008. Even the 1 bedroom conversions in better areas where I’m looking get hammered with multiple offers as soon as they hit the MLS and a lot of cash buyers.

Could you hire an inspector that would be able to look under the hood of a condo project? I would imagine that is not as simple as a single family home inspection.

[ctr70]

Zeitgeist re: you link….FHA has already delayed twice the implemenation of it’s new condo rules. IMO I think FHA/Fannie is going to have to make some adjustments to their condo guides or they are going to have way too big of a problem with condo foreclosures. I would look towards FHA possible making some adjustments to make it slighly easier to buy condo’s. b/c they already hold so many mortgages in condo’s, it’s not going to be in their interest to create draconian guidelines that reduce the value of those mortgages.

I also think if you plan to live in the condo and hold it for a while, this stuff will get worked out over time. As long as you are in a good neighborhood and getting in at close or near bottom (now), good chance you will be OK. They are going to be the ONLY semi-affordable housing left in San Diego and there will be limited housing suppy again in San Diego. This is not Texas where you can just build, build, build forever. SFR’s in good neighborhoods are out-of-reach for most, or even those that could buy, but don’t want the $3,500+/mo housing payment of a SFR in a *decent* San Diego neighborhood.

[ctr70]

Zeitgeist re: you link….FHA has already delayed twice the implemenation of it’s new condo rules. IMO I think FHA/Fannie is going to have to make some adjustments to their condo guides or they are going to have way too big of a problem with condo foreclosures. I would look towards FHA possible making some adjustments to make it slighly easier to buy condo’s. b/c they already hold so many mortgages in condo’s, it’s not going to be in their interest to create draconian guidelines that reduce the value of those mortgages.

I also think if you plan to live in the condo and hold it for a while, this stuff will get worked out over time. As long as you are in a good neighborhood and getting in at close or near bottom (now), good chance you will be OK. They are going to be the ONLY semi-affordable housing left in San Diego and there will be limited housing suppy again in San Diego. This is not Texas where you can just build, build, build forever. SFR’s in good neighborhoods are out-of-reach for most, or even those that could buy, but don’t want the $3,500+/mo housing payment of a SFR in a *decent* San Diego neighborhood.

[ctr70]

Zeitgeist re: you link….FHA has already delayed twice the implemenation of it’s new condo rules. IMO I think FHA/Fannie is going to have to make some adjustments to their condo guides or they are going to have way too big of a problem with condo foreclosures. I would look towards FHA possible making some adjustments to make it slighly easier to buy condo’s. b/c they already hold so many mortgages in condo’s, it’s not going to be in their interest to create draconian guidelines that reduce the value of those mortgages.

I also think if you plan to live in the condo and hold it for a while, this stuff will get worked out over time. As long as you are in a good neighborhood and getting in at close or near bottom (now), good chance you will be OK. They are going to be the ONLY semi-affordable housing left in San Diego and there will be limited housing suppy again in San Diego. This is not Texas where you can just build, build, build forever. SFR’s in good neighborhoods are out-of-reach for most, or even those that could buy, but don’t want the $3,500+/mo housing payment of a SFR in a *decent* San Diego neighborhood.

[ctr70]

Zeitgeist re: you link….FHA has already delayed twice the implemenation of it’s new condo rules. IMO I think FHA/Fannie is going to have to make some adjustments to their condo guides or they are going to have way too big of a problem with condo foreclosures. I would look towards FHA possible making some adjustments to make it slighly easier to buy condo’s. b/c they already hold so many mortgages in condo’s, it’s not going to be in their interest to create draconian guidelines that reduce the value of those mortgages.

I also think if you plan to live in the condo and hold it for a while, this stuff will get worked out over time. As long as you are in a good neighborhood and getting in at close or near bottom (now), good chance you will be OK. They are going to be the ONLY semi-affordable housing left in San Diego and there will be limited housing suppy again in San Diego. This is not Texas where you can just build, build, build forever. SFR’s in good neighborhoods are out-of-reach for most, or even those that could buy, but don’t want the $3,500+/mo housing payment of a SFR in a *decent* San Diego neighborhood.

[ctr70]

Zeitgeist re: you link….FHA has already delayed twice the implemenation of it’s new condo rules. IMO I think FHA/Fannie is going to have to make some adjustments to their condo guides or they are going to have way too big of a problem with condo foreclosures. I would look towards FHA possible making some adjustments to make it slighly easier to buy condo’s. b/c they already hold so many mortgages in condo’s, it’s not going to be in their interest to create draconian guidelines that reduce the value of those mortgages.

I also think if you plan to live in the condo and hold it for a while, this stuff will get worked out over time. As long as you are in a good neighborhood and getting in at close or near bottom (now), good chance you will be OK. They are going to be the ONLY semi-affordable housing left in San Diego and there will be limited housing suppy again in San Diego. This is not Texas where you can just build, build, build forever. SFR’s in good neighborhoods are out-of-reach for most, or even those that could buy, but don’t want the $3,500+/mo housing payment of a SFR in a *decent* San Diego neighborhood.

[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.

[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]

TG,

I big worry form me buying a condo would be the future or current ability of buyers to get loans to buy in the condo project. Many condo project prices in San Diego are getting depressed big time b/c you literally can not get financing on then. The ONLY choice buyers have is to pay cash. What do you think cash only buyers in your project will do the value of your condo?

The problem is when condo’s go below 51% owner occupancy (lots of rentals) or have other problems, and FHA, VA or conventional lenders will literally NOT lend on them period. In Florida there are a lot of buildings that are cash only right now and prices are plummeting.

These are things outside of your control as a condo owner, and they would scare me.

[ctr70]

TG,

I big worry form me buying a condo would be the future or current ability of buyers to get loans to buy in the condo project. Many condo project prices in San Diego are getting depressed big time b/c you literally can not get financing on then. The ONLY choice buyers have is to pay cash. What do you think cash only buyers in your project will do the value of your condo?

The problem is when condo’s go below 51% owner occupancy (lots of rentals) or have other problems, and FHA, VA or conventional lenders will literally NOT lend on them period. In Florida there are a lot of buildings that are cash only right now and prices are plummeting.

These are things outside of your control as a condo owner, and they would scare me.

[ctr70]

TG,

I big worry form me buying a condo would be the future or current ability of buyers to get loans to buy in the condo project. Many condo project prices in San Diego are getting depressed big time b/c you literally can not get financing on then. The ONLY choice buyers have is to pay cash. What do you think cash only buyers in your project will do the value of your condo?

The problem is when condo’s go below 51% owner occupancy (lots of rentals) or have other problems, and FHA, VA or conventional lenders will literally NOT lend on them period. In Florida there are a lot of buildings that are cash only right now and prices are plummeting.

These are things outside of your control as a condo owner, and they would scare me.

[Author]

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