It’s hard to be a real estate investor in San Diego today.
Mortgage rates are high, as are home prices, so it can be difficult to make the numbers work if you are a Buy & Hold investor like myself. However, there are still ways to invest like a boss if you are not deterred by the clickbait news about the market.
First, let’s start with what is really happening in today's real estate market?
Today we are seeing high Interest rates and earth shattering low inventory. In other words, there is nothing for sale and it costs almost double to finance it. The free money party ended, whoever bought and locked in a rate, congrats! For those who wanted to “wait”, well, not sure what to tell you.
So HOW can you invest in TODAY’S market?
Current Homeowners:
If you own your home and purchased it before May of 2022 and have a mortgage, then you have options since your rate is amazingly low! Of course, if it’s your primary home, then you would need to think through your strategy.
You could rent it out to a long term renter. The numbers won’t be cash flow positive unless you purchased your home prior to 2020 and even then, it would depend on the amount you owe, HOA costs, taxes, management fees, etc.
Pro Tip: Rentometer is a great way to check long term rental comparisons!
Or you could try the furnished 30 calendar day rental model as the numbers should pencil depending on the market, condition of your home and location. You will need to budget for the maintenance of your home and furnishings. Just know, you HAVE to include management costs in your equation because even if you “manage it yourself” you will be paying a platform to host and market your rental, which costs at least 10% in our experience.
Our investment clients opt to market their listings with Team Kolker. Why? Because we have over 10 years of experience with the furnished 30 calendar day model stream, own and market multiple rental units and have built a client base of reliable renters.
All Cash:
If you have all cash, then the sky is the limit! You will be able to do all of the above ideas and then some!
You could do a short term Airbnb depending on whether or not you are interested in getting a license and researching the laws related to where you purchase that home. Note: San Diego has some of the strictest regulations on vacation listings and budget to pay around 25% management fees.
We recommend the 30 calendar day furnished model which is cash flow positive from the start with an all cash purchase.
You could invest in property flipping. The main hurdle today is actually finding them in a market where no one is selling.
Some extra cash to invest?
What about if you have some cash but not enough for an entire purchase?
Note, this “cash” can also be in the form of a HELOC which is what I personally use to fund these types of deals. We are actively investing in big things AND are finding fantastic deals. Interested in getting involved as an investment partner? Please reach out. We would love to chat it out with you.
High End Flips:
The first challenge is to find a home to flip. Today's market has historically low inventory as many home owners are locked into loans with a low interest rate and are holding off selling.. However, we ARE finding the rare gems to purchase and renovate.
Case Study:
We are part investor in a luxury coastal flip deal. The acquisition price was $2.4M, with a renovation budget of $500K, The resale market value of the home will be close to $4.5m. We have partnered with the best of San Diego for this project ,who have decades of experience flipping homes and have never lost money on a deal. We only work with the best! This includes our team of designers, contractors, marketing professionals etc.
Commercial Opportunities:
Interested in a commercial deal? We are extremely well connected in this sphere and can help.
If you are interested in finding out more or partnering with us on upcoming deals please reach out! We would love to chat it out with you.