In the early 2000’s the best investments were multi-unit properties: 2 units or above. A single family home was not considered to be an investor’s arena. Why? Price too high to even approach a “break-even” point with a modest (10%-20%) down payment. Sure, ok to buy for future appreciation and tax shelter, but for the most part single family homes were not the arena of the small investor in San Diego, CA.
The San Diego income property market in some zip codes has changed all that. One area that has been hit exceedingly hard by the sub-prime disaster has been “City Heights” thus prices are really low. A densely packed multi-ethnic area of single family homes and small condo buildings, City Heights has been gentrifying rapidly. There is a huge mix of housing options: single family, condo, rental apts. And from low-end to (although I would not call it high-end) nice urban digs, close to downtown (5-10 minute drive) and city services (public transportation). City Heights also has one other benefit going for it: the benefit of a “coastal climate” with cool ocean breezes much of the time. Just a few miles inland and you can see temperature differences of 10-15 degrees. This a HUGE benefit during Fall in San Diego….and it’s a bonus!
I manage a property for an out of state owner. It is a clean house, 3BR 1.5 BA on a small lot
of land and I woud classify it in reasonable condition. There is a lovely family room w/fireplace, and private entrance (think Granny, roommates, teens).The front yard is a small enclosed area with some fruit trees and parking for 3 cars.The house is set far back from the street. The lot is non-existent, but that translates into no upkeep.
OK let’s talk monthly numbers. At $170K present market value the down payment is $20K (10% down and 3K closing costs).
P & I =$848 (5.5%)
Basic Expenses = $1104.00
The rent is $1350. That would bring the cash flow to $246 /month.But for argument sake, let’s say the house breaks even the first year, investing the $246 back into the house for new paint/repairs/upgrades. You would now have a single family home in an urban market in San Diego for $20K down, and you could ride the next wave of appreciation with not a care in the world. Oh and did I mention I had 12 calls on this rental the first week? And that rents usually go up after the first year? This is a great start in City Heights for the new investor in San Diego income property.