Where is the best place to buy an investment property in San Diego?

Asked by Jon Fotopoulos, IRVINE, CA Tue Sep 7, 2010

Is there a higher success rate renting to college students vs. families?

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Homertsimpson, , San Diego, CA
Tue Sep 7, 2010
Hey Jon,

Regarding renting to college students or families and which of them you might have more success with, college students will usually be a shorter term situation and a little rougher on the property whereas renting to families you'll typically notice they'll be there for longer periods and take much better care of your property.

I hope this helps!
Web Reference:  http://www.HomeInfoToday.com
1 vote
Homertsimpson, , San Diego, CA
Tue Sep 7, 2010
Hello Jon,

Wow this question has so many answers which may all be correct. Single family residence, 2-4 units, Commercial type property, land for speculation, fractional interest, and on and on. I guess it depends on what type of property you're looking for, how many people will be investing in it, what price range you're looking in, recourse or non-recourse, and how long you plan on holding the investment for.

You'll need to consider things like, cash on cash return, CAP rate, gross multiplier, vacancy factors, buying a property needing some work, or a property needing much work, master metered, access, parking, your anticipated level of involvement, and again on and on.

However, in my experience the closer you get to the coastal areas the more you'll pay for property in general, and consequently the lower the CAP Rates. If you head out to the east county areas you will usually find higher Cap Rates and will most likely get more for your money.

I guess the best way to figure out where you should buy real estate in San Diego is to first determine what you're looking for in a property; consider the above information and then move towards the coast or towards the east county based on the value you think is best for you.

I hope this has been helpful!
Web Reference:  http://www.HomeInfoToday.com
1 vote
Seth Chalnick, Agent, Cardiff, CA
Tue Sep 7, 2010
Generally speaking, the lower end of the price scale, the greater the ROI, and the lesser likelihood for capital appreciation.

2-4 units are good for this, but anything coastal is priced way high for any hope of even cash flow. I'd stay away from condo's that belong to HOA's with many units, because once the owner occupany ratio slips below 50% it becomes hard for future buyers to obtain conventional financing and then a spiral of death ensues from there. Lower end SFR's are good, but is comes a point where the property management issues outweigh the ROI.

Therefore, in my opinion the sweet spot for investment property right now is your basic 3/2 SFR with fenced yard and 2-car gargage, which you can pick up for around $325k.

Best bet is Oceanside in North County, Clairemont in central San Diego, and Northpark / City Heights area in the South.
Web Reference:  http://www.sethchalnick.com
1 vote
Robert T. Bo…, , San Diego, CA
Tue Sep 7, 2010
Dan just gave a great answer.

Generally we have been more successful with families while college students are typically _very_ hard on a home. However, if the home is all tile or located within walking distance of campus, then your target audience should probably be students. Try to get their parents to sign the lease agreement.

For great investment properties, try http://FinestExpert.com they calculate rents and costs showing you cash flow without you having to crunch all the numbers yourself. Of course, when you find a prospective property, you still have to physically inspect it. The internet is not _that_ good... yet. :-)
1 vote
, ,
Tue Apr 11, 2017
Hello Jon,

Have you looked into the growing area of Eastlake? It is in Southern San Diego, and closer to Chula Vista area but the community as a whole has grown exponentially and has well recognized school districts. Homes have a hard time staying on the market and would absolutely be profitable if looking to rent out to families in particular.

Let me know if there is anything I can help you with, especially any mortgage lending needs.

I hope this was helpful!
0 votes
Mays Kuhail, Home Buyer, San Diego, CA
Sun Apr 9, 2017
Hi Jon,

A lot of it depends on your budget and location, really.

The top affordable neighborhoods in San Diego are University Heights, Hillcrest, and East Village.

Other top neighborhoods (that are quite more expensive) are Mission Beach, Pacific Beach, North Park, and La Jolla.

Some of the above do better due to large student concentrations, and others because of families. The most important part is determining your budget, and then you can go ahead and choose the neighborhood and investment that's ideal for you.


0 votes
Lisa Thorik…, , San Diego, CA
Sat Nov 27, 2010
I think the previous answers should be helpful. I can add that the College area has a huge inventory of rentals at the moment. I believe North Park, and University Heights are some of the areas most in demand for rental and sales so the location is great. Look for a property that needs just cosmetic improvements unless you have good contracting skills or connections. Another area I think is a great buy is Mira Mesa. Many excellent choices with plenty of upside potential.
Web Reference:  http://www.lchometeamsd.com
0 votes
Prudential CA…, , Chula Vista, CA
Fri Sep 10, 2010
During the era of when when many people were able to get loans, many loans that were originated turned out to be very bad adjustable rate loans. This mortgage hangover we are in has left many people homeless and in need of rentals because they can no longer purchase homes with their bad credit. Typically college area homes are good as said in the previous posts but also look to new tract homes in areas like 4sranch, Otay Ranch and Scripps Ranch. these areas have very good school districts and many would be homeowners are looking for rentals there to keep their kids in school districts. Typically these renters are long term because they will have kids that need to attend school there. I for one dont like alot of turnover in rentals because you can lose alot of money that way..
0 votes
Patrick Hale, , San Diego, CA
Tue Sep 7, 2010
College area rentals will provide you security that the home will be leased.

I have had a lot of success in the Mission Valley and surrounding areas because you're pulling renters from SDSU, USD, Mesa and even UCSD. Not only do college students live in this area, but mission valley is a huge employment center and is in the center of san diego making it a prime rental investment area.

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Hope this helps!

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0 votes
Sarah Davis, Agent, Carlsbad, CA
Tue Sep 7, 2010
All of the other answers note excellent things to consider. Do you live nearby? Do you want to manage the rental yourself or hire a property management company? I own rentals in San Diego and for me personally, I manage them myself, but because of that I'll only by close to where I live. Just something to think about!
You'll probably get a shorter term rent out of college students and they may not maintain the property as well as with a family.
Web Reference:  http://www.RealtorSD.com
0 votes
Summer Brigh…, Agent, Los Angeles, CA
Tue Sep 7, 2010
Hey Jon!

I would have to agree with Mark and Kari Shea. Hillcrest, North Park, University Heights are all excellent uptown areas that are very desirable to renters. I have multiple clients that have bought in these areas and are extremely happy, and I have constant traffic at the apartment building we manage that's right in the middle of Hillcrest. Let me know if you need any more information about the area, I've been working in Hillcrest for 5 years.

Best of luck!

Summer Brighton
0 votes
Kari Shea, Agent, San Diego, CA
Tue Sep 7, 2010
Hi Jon,

Our investor clients have had the best luck in the Hillcrest/Noth Park areas. They provide a very stable rental market which investors love.


Mark and Kari Shea
Shea Real Estate
Real Estate Experts Serving San Diego County
Specialists in Investment Properties, Foreclosures, Short Sales,
Development Opportunities & Traditional Real Estate
0 votes
Jane Grant, Agent, Aguanga, CA
Tue Sep 7, 2010
As far as renters, military personnel make great tenants and there are several options for rentals near military bases in San Diego County. The military employees get great benefits, pay scale and the military, They also make great buyers when they are done renting and want to purchase a home.

0 votes
Keke Jones, Agent, La Jolla, CA
Tue Sep 7, 2010
I would suggest the beach areas for the best place to invest in rental property. There are high rental rates and you will sometimes have the option to vacation rent as well, doubling your rents! Depending on the type of property college students can be good renters. Usually their parents are the ones paying the rent.
0 votes
Daniel Heilb…, Agent, San Diego, CA
Tue Sep 7, 2010
This is a big question with several answers. Firstly, you must consider the purpose of the investment. By the nature of your question you are looking for a buy and rent or a portfolio investment? Next, price. What is priced good and what can you buy it for? Property values are dropping again and will flatten out over the next year, so it depends on whether you are looking to build equity into your home or are looking for appreciation. Unfortunately, there are several factors to consider here as well. Finally, renters are hitting the market in a huge way since renting is making a lot of sense with the unease of people buying a home so you will have the pick of the litter when it comes to choosing your renters. Families tend to stick around longer than students, or until they buy a home. Perhaps that would be a good lead for you. Students can oftentimes make a mess out of a house, but they are always looking! Good luck!
Web Reference:  http://ihousesandiego.com
0 votes
The only way to make cash flow from students is to put their parents on the hook. Don't bother. The way to make cash flow in san diego is to buy a 2/2 or 3/2 and construct a 1/1 in the back yard. It sucks, but its the truth. don't believe 7% caps, it more like 4. Okay guy.
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