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ctr70
Participant[quote=bearishgurl]I don’t think MM qualifies as “old enough” to be “gentrified.” And there’s no compelling architecture there that “higher demographics” would move in to “preserve.”
City Heights actually has a “WWII” and “mid-century” commercial corridor on EC Blvd that is kind of spruced up now with the cut-and-cover parks over I-15. A new “mid-century look” community rec center and swimming pool and the Joan Kroc Ice Rink near Colima Park rounds out the city improvements.
A lot of cute, rehabbed craftsman and even Spanish are found in CH as well, small in size (compared to adjacent communities with more expensive housing).
MM just has a conglomerate of newer mid-rise commercial bldgs and chain hotels on the east end, all bunched-in together. It just looks sterile and extremely crowded to me. 92126 is all on tract as well (except maybe ONE street). There is really no reason to rehab anything there for a “labor of love” as there are no pocket doors and redwood built-ins around the FP to save, etc.
There’s nothing wrong with this, but it’s not the sort of area that gets “gentrified.”
I agree that MM is probably better to raise a family in than City Heights, however.
SK is right. MM is within the “city” but is actually a “suburb” as it is separated from the “metro” portion of SD by MCAS Miramar.[/quote]
This is a good post, I think parts of CH will gentrify the next 10-20 yrs (the parts that border better areas). There are some cool pre WW II houses in CH. The hipsters are already starting to move into some fringe parts. CH borders North Park, South Park, Normal Heights, Kensington. It will take a while though, some parts of CH are very, very rough still.
North Park, South Park, Normal Heights, Univ Heights are classic examples of recent gentrification in SD. These areas have blown up in price and you post a rental on Craigslist and it’s rented in like a day to high credit tenants. I know I have a rental down there. The houses and 2-4 units properties really held their values during the downturn. A lot of the crafstmans and 2-4 units are not far off 2004/2005 peak pricing (and some are back at peak). To me this area + some parts of Bankers Hill, Hillcrest, Mission Hills is the coolest place to live in all of SD if you don’t have kids. It’s the only part of SD that is anything like hip, walkable cities like Portland, Seattle, SF, Austin TX (only the older core part of Austin), Brooklyn NY, etc.. This is also one of the few parts of SD that has some cool pre WW II houses and old style little “down towns”. I lived there before I blew out of SD to greener pastures in Seattle WA.
And I agree on Mira Mesa, I have never seen anything desirable about this area other than it’s location close to tech jobs. It is not architecturally attractive at all. Most of the houses are “blah” cookie cutter. It’s full of unattractive strip centers off MM Blvd and big box stores close to 15. I would personally never, ever live there. Very sterile. It would be too hard on the eyes.
February 16, 2013 at 4:40 PM in reply to: People aren’t leaving CA in droves… at least according to the United Van Lines survey #759592ParticipantThese statistics on who’s leaving what states are somewhat misleading. Everyone knows people are leaving the Northeast and Midwest U.S., it’s been happening for 60 years. What would be more instructive is to look where CA ranks with the high growth sunbelt and western states (FL, TX, NM, AZ, NC, GA, TN, WA, OR, ID, CO, NV, UT, OK). I would bet it’s towards the bottom of that pack.
Also you have to look at who is leaving and who is coming in in terms of demographics (income level, educational level, etc…)
ParticipantI have to chime in and say I would not be very excited to wake up every day and say, “wow I live in Lakeside or Ramona”. Lakeside and Ramona are not exactly cool & breezy in the summers either (though admittedly much cooler than Phoenix). And I would doubt $350k buys you much out there anyway right now if you really investigated it. Especially when you add in the cost of all the fix up you would have to do on an older property. If I was living in SD I would definitely choose to rent in a much nicer, higher end, closer to the coast communities or I 15 corridor (Scripps, PQ, RB, etc..) with a much more educated crowd vs. buying in Lakeside or Ramona.
True you can get some space out in these communities and elbow room, and if you want to be in a semi rural area with a very blue collar working class vibe with lot’s of “fine” fast food cuisine and old strip centers with liquor stores, it may work. But they just don’t have this nice feel like it’s a place you would really aspire to be. Most educated people are just not going to want to live in East County or Old Chula Vista no matter how much bearishgirl promotes them:) Just ain’t gonna happen. They are just flat out kinda dumpy across the board no matter how you slice it.
Also Arizona in summer you can escape up to the White Mountains on the New Mexico border around Alpine that are cool in the summer, you can go up to the San Juans in SW Colorado near Durango, Lake Powell, Flagstaff, etc…
For the record I personally would choose a smaller place to rent close to coast in SD over AZ if given the choice. But I don’t have kids. But I do not think AZ is that bad as long as you have a plan for those 4 summer mos of pure hell. And I think you can get a WAY, WAY nicer house there than SD.
Even though I would choose SD over AZ if given the choice, I think the ocean is overrated. I don’t live in SD anymore, but when I did I only went there say maybe twice a month and I don’t miss it at all. I don’t see why people go so gah gah over it. I guess maybe if you are a super avid surfer or something. But to me it’s not that great since the water is too cold to swim 12 mos a year and the sand is not like HI, FL or Carribean sand. Also there is only one stretch of beach that has been preserved (Torrey Pines). Most of the rest are so developed with concrete right to the edge and fast food restaurants, traffic and crowds, to me it’s just not the end all and be all at all. Give me mountains, snow, rivers, meadows, creeks, trees over those crowded cold water beaches any day.
ParticipantWhat a nightmare Econprof. Keep us up to date on how you resolve this. You just made me feel a lot less confident about being a landlord!
ParticipantHow can it be proven whether the bed bugs were there or bought in by the tenant?
Participant[quote=enron_by_the_sea]What does “number work out” mean in context of a rental property?
I always consider getting one and do a mental calculation of
cap rate = (rent – vacancy – tax -insurance – HOA – maintenace – Prop. Management) / Price * 100
In and around Central San Diego county, the result is typically 3% to 6% depending on whether I assign any value to maintenance and prop. mgmt. or not… While it is better than bubble days, that still does not interest me so I give up.
For those, who are into landlording now, what is the flaw in my calculation? or is 3%-6% now considered a good cap rate?[/quote]
I buy condos, SFR’s and 2-4’s so I don’t use cap rates as they are more for larger apartments. I use more cash on cash return. How much down payment do I have + fix up to make it rent ready, and then what is my monthly positive cash flow + loan amortization pay down. From late 2008-end of 2011 you could get better than 10% cash on cash return on leveraged condo’s, SFR’s and 2-4’s. In come cases WAY better then 10%. And that isn’t even factoring in appreciation. Where are you going to get that type of return year in and year out? With appreciation that return can go though the roof. It already has for 2008-2011 rental buyers who bought well.
A lot of people do not factor in loan amortization into their return, and with these low rates it is HUGE. With a $350k loan 30 yr fixed loan at 3.75%, over just 5 years your tenant pays down $34,729 towards the loan principle for you. And loan amortization not taxed! So you get that huge loan amortization pay down + the positive monthly cash flow.
Also if you really scoured the market and put a lot of time in & became a really good buyer, you can find properties with hidden value and then add value. This can add to your return big time. There might be something you can do to greatly increase the rents, or you may have bought on the edge of a rapidly gentrifying area, or you can create extra parking, etc…
These are reasons why I think applying standard vanilla “cap rates” to certain regions for mom & pop type rental investors that buy condos, sfr’s and 2-4’s, doesn’t really work well.
Of course personally I don’t think the cash-on-cash return is nearly as good anywhere on the coast of CA vs. what it was in that short window from late 2008-end of 2011.
Participant[quote=SD Realtor]Before reading these tips, understand you cannot discriminate against any type of tenants. Here are some things I do….
– Don’t rent to students
– Rent only to single people or families. Maybe a committed couple.
– Rent only to people who have steady jobs. Part time work is not steady.
– No roomates at all.
– Any new tenants in the home not on the lease is an instant default. Time to evict.I have had plenty of tenants with problems on their credit report. Even a few who had their home foreclosed on or short sold. More important is verification of their income and cash flow. I verify that the income they claim on the rental application can be traced to deposits in their checking account and that liabilities on the application match large withdrawals out of the checking account. I ask them to explain discrepencies.
While checking on previous rental history is important, never deem it to be reliable.
Low income areas are not a problem unless you as the landlord lack the will to strictly enforce the lease. This was the original posters (friends) problem.[/quote]
Excellent post. All sage wisdom!
Participant[quote=bearishgurl]IN SD County, I think you, as a landlord, need to manage your rental propertie(s) yourself to make the numbers work out, unless:
You paid cash for the property, OR
you bought the property more than 15 yrs ago and never removed equity.
For best cash flow (incl inevitable vacancies):
You should have no MR, AND
if you have HOA dues, they are less than $60 mo (SFR) and $160 mo (condo).
I don’t think it matters what area it is located in. “Good” tenants can be found for every area and “lower-quality tenants” likely means you paid much less for the property, so have less at stake if it is trashed or squatted in before you are able to legally evict your tenants. And don’t think for a minute that this can’t happen in a $3000+ mo rental!
Also bear in mind that Section 8 and other gov’t-administered rental-assistance programs pay at least 80% of the montly rent REGULARLY, so it might be prudent to get approved for them. These types of rent programs are not dependent upon the whims of your tenant’s employer and cause tenants to stay much longer than the average tenant.
Bottom line is if buying rental properties in CA TODAY, buy local properties only and manage them yourself.[/quote]
Excellent post BG! I would add when much better deals could be had on the CA coast back in late 2008-end 2011, you could still make a condo cash flow very nicely even with a $250 hoa, since rates are so low and prices back then had over corrected back to 1999/2000 in some cases (yet getting 2013 rents!). And with a condo you have lower home insurance and much lower monthly maintenance costs (no landscape, exterior painting, roof, etc…).
ParticipantIn my opinion there was a short window to buying rentals on the coast to get a decent cash-on-cash return on condos, sfr’s and and 2-4’s. That was late 2008-end of 2011. I think the window is mostly closed once again. You might be find a deal in a bad area here and there, but for the most part the deals are way worse now. To me not worth it for the pain of buy & hold. And this fact doesn’t really even reflect in the overall median numbers. But you could “steal” properties from late 2008-2011 and get spectacular deals when there was still some inventory, more fear in the market, banks were not doing through appraisals on short sales, etc… You could get really good deals and in good locations. But now it is a way different market. Decent deals are flooded with offers the day they hit the MLS. There is now no more fear, banks are doing better appraisals on short sales, there is no inventory, etc… Real estate is no longer scary to buy. Certain submarkets and property types are up 30%+ in price since that time.
On landlording I think checking past rental history is key. The KEY is to talk to PRIOR landlords, not just current landlord of the place they are moving out of. Current landlords may just want to get that tenant out of the property. You have to be careful though you are not talking to a “plant” by the tenant. If you check the last few years and the tenant has never missed a rent payment, your odds are pretty good.
ParticipantI was thinking of buying rentals when prices were down 2008-2011 in Riverside, I’m soooo glad I instead bought rentals close in SD. Especially since I live in SD. SD’s rental market is very strong. I have had flood of interest the moment I put my properties on Craigslist for rent. So far great tenants that pay like clockwork.
If you are in good areas close to the coast you can afford to be very picky with tenant selection, b/c you have so many people that want to rent the place. But out in the boonies or in ghetto areas, beggars can’t be choosers. You have to take what you can get and that can be problems. Even worse dealing with those issues if you are a 2 hr drive from the property.
Some people can handle the rougher properties & do well with them (but they usually got a absolute steal buying them). But a lot of people fall into the trap of seeing the cash flow “on paper”. Problem is after a ton of vacancies and evictions that cash flow “on paper” can go up in smoke. Sometimes the better properties in better areas don’t look as good “on paper”, but get way better tenants, less headache, no vacancies, no missed rent, better appreciation.
ParticipantIt’s amazing to me that everyone criticized & demonized Greenspan so intensely for keeping rates so low for so long and playing such a big part in the housing bubble, yet Bernake is doing the exact same thing now. No way prices would be rising if 30 yr fixed rates were at a long term average of 6-8%. With a 3.5% rate right now, they are going to have to stay low for a long, long time for prices to keep rising and not fall. Or we would need incomes to start rising at a healthy clip to accompany a rate rise & house prices to not fall.
I mean freaking 3.5% 30 yr fixed. This is not even close to anything anyone has seen since the 19th century!
ParticipantAnd I wouldn’t listen to anything Lisa Appleton-Young or at Cal. Association of Realtors or the clowns at the Nat. Assocation of Realtors puts out. They totally missed the bubble in 2006 (see David Learah) and now they are trying to make up for it by being overly conservative. Classic. I would listen to investors with lots of money at stake in the market like Bruce Norris.
Participant[quote=Jazzman]
And not too fast with the declining foreclosures please. The drop may have been largely due to the well publicized ‘mishandling’. NODs actually increased in July in some areas. http://www.nctimes.com/business/housing-foreclosure-rate-falls-but-rise-in-defaults-predicts-clouds/article_97008e26-076a-5500-93f5-c3f845625163.html
[/quote]I have heard the two best minds in the state of CA regarding the housing market, Bruce Norris of The Norris Group and Sean O’Toole of foreclosureradar.com speak in person. And they say there is no wave of REO’s coming (in California at least). The REO listing agents have actually laid off all their staff and many have changed careers because the banks are telling them there is NO inventory coming. Also, it’s a total myth that banks are “holding on to a ton of inventory”. Yes they are letting people squat in their homes for 3-4 years not making payments, but they are not physically holding on to inventory.
Another thing is with prices rising this year and next, it’s creating less underwater owners. And it’s creating a psychological change with owners. Home owners are now getting hope they may be able to sell some day without losing money, so they may decide to make their payments and keep their property. Rising prices creates a positive domino effect with less owners underwater + construction starting up and creating jobs.
I’m saying all this being a huge housing bear myself. Bruce Norris was the most famous housing bear in the state in 2005 writing reports and speaking throughout the state telling people to GET OUT of the market. He is a contrarian thinker. And he is predicting prices to rise very steadily in CA the next 3 yrs due to no relief in site for low inventory issues + low rates for the foreseeable future + boomerang buyers coming back in the market.
Participanthttp://www.dqnews.com/Articles/2012/News/California/Southern-CA/RRSCA121212.aspx
I’m going off Dataquick which shows a 13.7% rise year-over-year for SD County. Dataquick uses data directly from closed sales from the county recorders office. This is consistent with what I’m seeing being an active investor/buyer in this market since it crashed in 2008. I actually think in certain sub markets it is up much more than 13.7% in 2012. Like the lower end parts of town.
Case Shiller is 6 mos old, tired, stale data.
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