I too wonder if you have made your purchase, but I still have a little to add to the conversation either way. You would think that $500,000 is a lot of money and having cash would certainly help but in any of the beach areas of San Diego $500k does not go very far. The heart of your question is about investing and if Auction, Pre-foreclosure, REO's or traditional sale is best. The answer is all of the above. Investors have a standard formula to determine their return on investment ( ROI), so it's more a math problem than it is location or anything else. However, short sales and banks can be difficult to deal with and take longer.
Investors buy for two reasons - to flip or to hold and rent. If you are flipping you will need to know market value of improved units and have connections with a contractor. If you are holding, then you will want a rental analysis.
Best to you
Personally, I would purchase vacation rentals if you are looking at Mission Beach or something that people can rent out while the are stationed here, in school or short summer rentals like a condo, townhouse, or small beach house.
If you have any questions, please let me know.
I am an agent who is also an investor and works with other investors.
Realtor - Cal BRE #01893550
Keller William- Carmel Valley
12780 High Bluff Dr #130
San Diego, CA 92130
Cell (858) 617-9449
Email - firstname.lastname@example.org
website - http://www.sandiegohomesbynancy.com
David R. Indermill
Re/Max Hall Of Fame, CDPE | Since 1998 | Luxury Real Estate Advisor
International Referrals | Bank Owned Assets | Off Market Properties
Large Cash Investor Fast Close Network | B.R.E License # 01232827
Cell: 858-414-LIST (5478) Texting OK
To demonstrate o capabilities in this area please review the following five examples: a doctor, "Ready to Retire", a retired gentleman, an entrepeneur, and a small business owner.
Dr. X, in 2003, had read our annual newsletter and came into our office. He had three properties in Pacific Beach and had the same manager for about twelve years. Management had operated under the "keep rents at the same level and keep the same tenants for years and do as little maintenance as possible" philosophy. It works for a while.
When Dr. X came into our office he said he wanted to take a comprehensive look at his properties and possibly take a new direction. Dr. X and Rick Thornton performed a walkthrough inspection of all three of his properties. Property A was a well- located 8 unit near the bay in very poor condition and very low rents. Property B was a well-located 9 unit with very large units and lots of parking within eight blocks of the ocean in extremely poor condition and extremely low rents. Property C was in tear down condition and extremely low rents. The portfolio represented a lot of potential, but the properties potential was not being utilized.
Dr. X asked for my recommendation, which was as follows: Property A had to be rehabilitated immediately and I offered two different scenarios a light rehabilitation and a full rehabilitation. Property B we should do a minimal rehab and raise the rents to market and take a look at the property again in five years. Property C was a tear down. The units were too small to rehab and I recommended three scenarios the owner could contract with a design/builder(long term contact), complete a joint venture with a design/builder or sell to a developer and complete a 1031 exchange into a newer property.
Dr. X looked at the options and concluded on the following strategy: Major rehab on Property A, a light rehab with maximum rent increases for Property B and to sell property C and complete a 1031 tax deferred exchange. The result of these moves was on property A: An increase in net income from $12,000 per year to $42,000 per year and a completely rehabilitated building. Property B: An increase from net income of $16,000 per year to $32,000 per year and decreased liability through a well-maintained building. Property C: An increase in net income from $5,000 per year to $10,000 per year and purchased two high quality well located buildings to replace a building that was falling down.
Ms P has three properties with 4 units each in Pacific Beach that she had purchased through Cal-Prop in 1991. There were tremendous locations. She had weathered the storms of the mid-nineties market and she was about to retire and she had significant equity. She further needed some cash to pay into an old retirement plan, which would increase her retirement stream. The year was 2004 and interests rates were very low and her variable loans had a 7% floor. We reviewed all of the options including selling and paying taxes, selling and carrying paper, converting to condominiums, only doing a refinance and finally doing a re-finance and re-position the property as luxury apartments. In the end Ms P chose the last option. We refinanced, pulled enough equity to pay down her retirement plan, completed a full remodel of the units for $350,000 and her net cash flow on the units went from $25,000 per year to $60,000 per year.
Mr. D has owned his apartments for over 20 years. They are in an extremely good Beach location, but are aging rapidly. Based on the value in today's market despite the fact that Mr. D has a very attractive Prop 13 property tax payment and the properties are free and clear the return based on current equity is 3.25%. Mr. D is retired and wants to cut down his involvement in oversight and management. Cal-Prop proposed and assisted Mr. D in selling his buildings to a condominium converter for an extremely attractive price and completed an IRS 1031 Tax Deferred Exchange in a Tenant-in-common (TIC) property. The TIC yields him a management free 8% return on his money. TICs can be found with 7 to 10% return in California and across the country.
The benefits include elimination of phone calls from tenants, maintaining market rents, having maintenance issues handled quickly, efficiently and in a cost effective manner, having a professional interface to eliminate over personalization of the landlord tenant relationship all of which leads to the time you deserve to spend as you choose.
We create a comprehensive solution for your management needs by assessing your needs, establishing your client type, having a primary and secondary point of contact and then implementing our team approach.
We develop property management solutions (eliminate the link) that meet the needs of many different types of ownersâ€”from single-unit owners to owners with portfolios of up to two hundred units by assessing your. During our first phone conversations and meetings we will carefully assess your needs to determine two critical factors: What type of client are you through our designation of Level Type and who will be your primary and secondary point of contact at our company.
Every investor has a primary point of contact for each owner. Each owner utilized that individual for all of the information you need to know about your property. This system is unique to our team. In addition we assign each client a secondary point of contact. This means 90% of the time you call you will be able to speak to a representative and have your question answered immediately. To determine who you primary and secondary point of contacts will be it is necessary to listen to your needs and determine what Level of Contact you desire. We have found that the needs of our owners and investors fall into four categories: levels 1, 3, 5, and 5+.Please see where you are
Level 1: Level 1 clients desire a level of service that is very hands off. They prefer that we apply their standard policies and procedures and have limited need for daily direction and guidance. The Level 1 client still makes strategic repair/replace decisions. Level 1 clients enjoy that our experts monitor major components, such as the roof, stucco, drain system, and plumbing, and discuss the life expectancy of these components on a regular basis. The primary point of contact for Level 1 clients , Director or Operations, and the secondary point of contact is Rick Thornton, President.
Level 3: Level 3 clients are a hybrid of levels 1 and 5.
Level 5: Level 5 clients typically own one house or condominium but can also be larger owners. They want to be notified of upcoming vacancies to discuss the costs of the unit turnover. They like to approve large or even moderate expenditures. Communication is the key for a level 5 clients. The primary point of contact for level 5 clients is Diane Schmoldt, Lead Property Manager, and the secondary point of contact is Director of Operations.
Level 5+: Level 5+ clients have specific requirements such as a particular plumber, type of carpet, depository need, or any number of special requests for their property. We work with this type of owner to ensure their needs are met.
We have perfected a team approach as opposed to the portfolio approach used by our competitors. . We apportion tasks amongst team members systemically, assigning each member tasks for which they are specifically trained and handle efficiently and competently. For example, one specialist handles insurance issues, but when there is an upcoming vacancy the entire property management team fields calls, shows the unit and qualifies the prospects. Our computer system is automated so that the upcoming unit turnover information is sent to maintenance and the maintenance team is dispatched the day the unit is available to assess the unit, make appropriate deductions from the tenants deposit and begin preparing the unit for a new tenant. At any time a property has an issue or needs support all thirty plus team members can be working on your property.
I have lived in the area and can tell you that it offers a great deal of value and room for good appreciation.
Also, there are a few detached properties that can be obtained under $500k with close proximity to the beach. At the height of the market it was unheard of detached properties available for under $500k.
Happy to show you some of the aforementioned properties if you are interested.
Jay S. Becker, PRINCIPAL / SR. REALTOR - 21 years licensed
Lux-RE Homes - a Full Service Real Estate Brokerage
direct: 858-222-4321 x7
toll free: 888-589-7346 - (888-LUXREHOMES)
fax: 855-589-7346 - (855-LUXREHOMES)
I'm wondering if you are thinking of using the property as a vacation rental. if so you will need to be certain that the HOA's allow seasonal rentals. If you purchase a single family home ( only one on the market right now at the price range) , then no problem.
There are many areas in San Diego you might want to consider in addition to Mission Beach. At that price point you might have a very hard time finding the right property , but if you go in to other areas you will more opportunities.
Auctions, Pre-foreclosures (aka - short sales) REO's all sound like good ideas but often the better deal is from the traditional sale, because they are more willing to work with you. Banks tell you want to do and when.
Keep an open mind when you are searching.
Condoboy's post is exactly the reason we gave you the advice we did. Know your numbers and get legal, tax and property management advice BEFORE you talk to an agent or look at property.
Best to you,
Mark & Kari Shea
Shea Real Estate
First, best of luck with your purchase. Here is our advice to you:
1. Auction - This is a specialized group of people/agents that you will not usually find here. If you are familiar with this group, they are extremely experienced and business savvy. We could introduce you to one person who does this regularly.
2. Pre-foreclosure - These are usually short sales, and when they are not, a lot of work for minimal results.
3. REO - A lot of competition for worthwhile properties. Make sure the agent you select HAS EXPERIENCE with selling & making offers on REO properties. In our opinion, that would mean at least 15 - 20 closed sales in the past 2 - 3 years.
4. Traditional Sale - Also a matter of sifting to find the right properties.
Know that what you are seeking will take time, patience, experience and trust given you are out of town and offers will most likely be made sight unseen. Trust and someone that understands your needs are the top two priorities.
Also, know your numbers, find a good property management company and get advice from a real estate attorney and a tax professional to understand all of the liabilities and the tax ramifications of owning an investment property.
Best to you,
Mark & Kari Shea
Shea Real Estate
Home Sales Specialists
Valuation Specialists & Consulting
Land Sales, Acquisitions & Consulting
Serving Greater San Diego
Keller Williams Realty
Best to choose an agent to work with and communicate all of your wants and needs to them. Generally speaking, short sales tend to be the best value and can be priced 10% below market value. However with a motivated seller and the right price, any property can be a great value. With a shortage of Inventory in San Diego, prices have begun ticking up. I have a great software program that analyzes and compares available properties, to let you know which ones are the top investment opportunities. I am happy to share! The affordability factor in San Diego has not been this good since 1970...it's a great time to get in!
Windermere Real Estate SoCAL
There have been relatively few foreclosures this year. You are likely going to find short sales or traditional sales. If you have a time frame in mind, the traditional sale is the best way to go. If you can be fluid and flexibhle, and you find a short sale you like, write an offer and wee where it takes you.
I only recommend auctions for experienced investors with cash. When you buy at auction you don't have the same consumer protections and disclosures that you get when buying a home through the MLS.
Please let me know what I can do to help you. I know the Beach community well.
If you'd like to receive automatic updates every morning when new listings (short sales, REO's and traditional) you might want to go to my website, http://www.GreaterGoodRealty.com and click on the Orange Bar below the photos. This is a free service in which you can create any search criteria that you'd like and be able to view current listings instantly as well as receive the updates when new ones hit the market.
If you have any questions and are not already working with another Realtor, you are welcome to contact me for further guidance. Good luck!
By the way, Iâ€™m the co-founder of Greater Good Realty. In addition to providing valuable information about the San Diego real estate market, my company donates 10% of our commissions to local charities and non-profit organizations throughout San Diego.
We hope to make a difference for those in our neighborhoods!
Greater Good Realty
CA DRE# 01888818
I would advise you to stay away from the auctions since you will have more to risk than to gain.
REO's can be good if the price/location is right.
When you invest in Mission Beach you need to make sure that your property is either ocean or bay front
to capitalize on your weekly or monthly rentals. The weekly rentals season starts from June-August and
then you can either rent to students or executives for the other 9 months. If you can not get the property
you want on ocean or bay front, then make sure the property is walking distance to the beach or bay.
I have been selling real estate here in Mission Beach for over 14 years and have SOLD many ocean front
properties 2 or 3 times over. There was a year that I had 5 ocean front properties listed for sale on the market at the same time which was more than any other agent.
Feel free to contact me at your convenience.
David R. Indermill
Luxury Real Estate Advisor
Re/Max Hall Of Fame
Re/Max La Jolla
Are you planning on living here full time? Seasonal?
Would you explore multi unit dwellings?
Is 500k your down payment or total capital investment?
I concur with the other agents regarding auction type. (risky)
REO's are decent. I have full access to REO's in mission beach and the surrounding community. I can also explore some alternative options which may also suit your needs. You may contact me or have your agent contact me directly to discuss your objectives and any possible referral.
I love Yahats!
My office is on Ocean Front Walk in Mission Beach and I specialize in the beach area. My broker has been in Mission Beach selling and property management for over 35 years, and I've been selling for over 18 years, between the two of us we can direct you to the best investment property to buy. Give me a call or an email and lets talk.
All the best,
Bill Luther Realty
3685 Ocean Front Walk
San Diego, CA 92109
Auction - unless your experienced at this, there are some pretty scary downsides. You have to know about all the liens on the property, including other loans.
Pre-foreclosure - This would likely end up being a short sale, so if you don't mind the frustration and time involved, not to mention a chance the sale will never close, it's an option.
REO's - these can close much faster, and you can get a good deal if the property needs a little work. Then any leftover money can be used for flooring, paint, appliances or whatever.
Traditional Sale - always an option!
You really have to look at each listing separately for seller motivation, etc. The preliminary investigations will depend on what your investment strategy is. Are you planning on buying & holding (renting it out)? Or, do you plan to flip it? There are much different criteria to consider with each. I'm happy to get you started, just email or call!
Cory La Scala, REALTOR
If you have 500k I would suggest hiring a Realtor and staying away from the auction. The reason for this is you have access to a discovery and inspection period, with the auction you may get a better price, but there is more risk involved. Depends how you handle risk. Besides, on certain properties, you sometimes can get away with auction-like prices with the proper strategy.
Hope this helps and hope you hire me,
Hector R. Gastelum
Realty Executives Dillon
My website has a search function that is helpful in finding properties. I also have an Excel spreadsheet that you can use to analyze your cash flows.
The problem with buying a property at a foreclosure auction is that you do not have the opportunity to do inspections of the property before you buy.
If you need any help I would be glad to work with you and help you find the right investment property.
I am never too busy for your referrals
The San Diego Property Shop
CA DRE # 00648687
I have 3 units for sale in Mission Beach. 2br/1ba and 2 studios. Both Studios rent for 1000 and 1100 per month am the 2br rents for 2000. The list price is 749,900, with 500k down your payment woul be around 1800. This would give about approximately 2200 positive cash flow or live in one and rent the others out.
Please call or email me with any questions.