Though this post is aimed at San Diego investors, if your market is relatively high priced, with rents requiring down payments of at least 30-40%, I’d like to hear from you too.
I’m very interested in hearing from folks who’ve invested in San Diego income property. I’m lookin’ for the small stuff, usually bought by the guy at work. Usually, it’s the 2, 3, and 4 unit stuff. If you have a bunch of houses/condos — please join right in.
We all know what happened and how it’s workin’ out if you bought here in the last 2-3 years or so.
However, if you’ve acquired income property from say, 2002 or sooner — get ahold of me and let me know your thoughts — how are they performing for you?
Here’s what I expect to find out.
They had to put down a large payment. Cash flow is rare, and pretty small. For those having invested more than six years ago — congratulations, you’ve made a very nice hit. You’re dead in the water now, but your capital grew like a weed, didn’t it?
For those who’ve owned their properties a relatively long time, you’re ever so happy with your cash flow. It’s paying for — well, probably your monthly entertainment, and not much more.
I had a client who owned the same fourplex for 13 years. As you might imagine, their equity position was well over 50%, in this case, over 65%. After all those years? Their cash flow was still less than $1,000 a month. Pennies compared to what they could’ve had — both in capital growth, and cash flow later on.
Welcome to San Diego real estate investing.
They are now living back home, in another state. They want their kids to get the property when they pass. Their kids are spread all over the country, and don’t know me except through Mom and Dad.
If circumstances were different. If they were younger, say 50 or so — they might, (probably?) have a very different outlook. Let’s just ignore the obvious here. They should’ve executed a tax deferred exchange (1031) years ago. The fact is, they should’ve traded up at least three times since they bought them.
Won’t bore you with the details, but at this point, the owner of a fourplex with that sort of equity, could, conservatively speaking, wreak some pretty positive havoc — outa San Diego.
Back to San Diego investors.
What do you think you should be doing with your income property’s equity? Nothing? Maybe refi for some cash — or just a lower interest rate? Trade up — maybe for some cheap local foreclosures?
Have you given up on real estate investing cuz you just can’t see past the local San Diego market?
The last year or two, as Josh and I have gone around the west and southwest, conducting seminars for investors, we’ve heard a couple thoughts repeated consistently.
“We would have done something before now, but we’ve just not been able to find anyone like you and Josh — who specialize in real estate investments, 1031′s, and actual real life strategies.”
“Every time we asked our real estate guy about what strategy we should implement, or about a tax deferred exchange, it was deer in the headlights time.”
We’ve heard those comments, in their various forms, in city after city. Dozens of times now.
Please, if only for fun, let me know how your San Diego income property investments are workin’ for you. I’ll be more than happy to answer any questions, if you have any.
You’ll be contributing to a post next week, where I’ll be comparing your experiences with what’s possible. Most of the country hasn’t experienced the kind of cartoonish appreciation we have. They don’t know the thrill of buying a real estate investment property, waiting only 1-2 years, selling it, and netting 2-5 times what you put into it.
So please call me, email me, or whatever. I’m excited to find out your personal views on the local real estate investments you’ve made.
Meanwhile, it’s a little after 11 in the morning, and 70° at the office — just another boring December day in Paradise.