San Diego’s real estate values will continue their downward tilt through 2010. An opinion, but based on much data and the feeling in my right knee. Too many local investors have, with nervous smiles, pointed out the prices are slightly up year over year here. True enough. Tell ya what, why don’t ya buy several properties this summer, then we’ll talk next summer. It gets pretty quiet, sometimes uncomfortably so.
NOTE: Before continuing it’s important to understand San Diego ain’t the Lone Ranger here. There are numerous similar markets. All of SoCal and most of NoCal for example. (Think Palo Alto) 
But around the country, whatever I say here about SD is likely to have traction in many, many regions.
We’ve been culling through our database looking for income property owners who’re best positioned to effect a high quality move of their equity(s). We’ve been blessed and handicapped simultaneously by the reality of gettin’ up to speed on a brand new piece of database software. The blessing though is far outstripping the irritations of the necessary learning curve involved. It’s a killer program — the best I’ve ever seen. Anywho, we’ve been noticing a disturbing trend as it relates to new loans on investment properties.
Does this describe you?
Property bought way back in the day, or even in the last 2-5 years are showing massive new loans on them. I know San Diego’s rental market pretty well, which means it ain’t exactly challenging to figure out these loans don’t make much sense — objectively speaking. For instance, a La Mesa duplex sportin’ a $400,000 5.5% loan simply won’t work. Even if both sides rent for $1,350 monthly (not likely), the payments alone would be $2,335 — leaving a whopping $4,380 annually to pay operating expenses on a 40-60 year old property, built when either Truman or Eisenhower was in office. Believe me when I tell you the operating expenses for that sorta property, even self-managed wouldn’t drop below $8-9,000/yr no matter what kinda voodoo analysis is inflicted on it.
Look, I get it. It’s a sign of the times, right? People need money so they tap into their income properties. What happened to the money? Was it invested into more solid real estate? Was it used as a stop gap for personal financial difficulty? Maybe it was used to pay off other more pressing debt — who knows? I don’t.
If this does describe you, one way or the other, we should definitely talk.
You have more options than you currently believe. Whether you’re contemplating a refi or already did the deed, you can improve your status quo. Over the years I’ve learned what the #1 limiting factor has been for most of our new clients — they simply were unaware of a whole page of options remaining on their menu. Sometimes it’s not a whole page — it can be just one. But if it can make a measurably positive impact, one is all ya need.
Think about moving from relatively ancient buildings to newer or brand new properties with equal if not better locations and tenant quality. Also, almost always there’s a big grin resulting from the major difference in price vs rent.
Sorry, but that’s one of the major factors causing San Diego property to land on the B-List in the first place.
We can talk ’till we’re both blue in the face and nothing’s gonna change the hard numbers. Your stuff is relatively prehistoric. It’s just as likely to be functionally obsolescent as not. Your operating expenses are only gonna get worser and worser as Grandpa used to say. (Much to the chagrin of Grandma.) When you hit retirement with properties as old or older than you are, something was fundamentally wrong with the Plan.
There are moves you can make which will create a significantly improved position for you as a real estate investor. Your retirement can be moved up on the quality scale with less muss and fuss then you might imagine. Your newly refinanced properties don’t hafta be your personal herd of albatross.
The only thing keeping you from learning the options available to ya is avoidance of the subject in general. Let’s talk so you can at least understand what’s possible. The vast majority of folks soon realize they have an unexplored page on their menu. Give me a buzz at 619 889-7100. Have a good one.
Related posts:
- Attention San Diego Real Estate Investors — We Need To Talk
- How Can San Diego Real Estate Investors Improve Their Current Strategy?
- San Diego Real Estate Investors Are Frustrated — Their Properties Didn’t Sell
- San Diego Real Estate Investors — How’s That Income Property Workin’ For Ya So Far?
- San Diego Real Estate Investors Try To Avoid Saying ‘What Was I Thinkin” 5 Years From Now
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