I see this question was posted a long time ago (!), but I still think it is relevant to answer. There definitely are some great buys in the North County area for investments. In fact, I have been working with several investors in this area and a few are on their second or third purchases. Some areas that were very popular years ago in the boom are seeing a lot of pre-foreclosures and foreclosures, and prices are fantastic. One such area is San Elijo Hills. I have sold several properties in here recently, and there is a lot to choose from. The nice part is that they are newer and you can find move-in ready properties for great prices...plus it is a super time to negotiate.
Other areas in Carlsbad are also in similar situations, like Rancho Carrillo and many homes in the 92010 zip code (Northeast Carlsbad). I would definitely not discount North County if you are looking for investment property, and of course it depends on what someone wants (attached vs. detached, price point, etc.).
I love north county (especially Carlsbad). In fact I have been looking for a house for myself there. HOWEVER, I do not beleive it is the best place for investment as a rental. Generally, the rents are not high enough for the money expended on the property. One of the exceptions is condos NEAR the water. There are a few buidings that seem to specialize in vacation rentals that rent for big money furnished during peak months. Also, La Costa Resort has just built brand new condos which they had a few left for sale 2 weeks ago. They will pay you the rent for two years plus your homeowners (I think) as an incentive to buy. In addition, if you let the resort rent them for you they take a large percentage of the money but they will probably be rented for you the majority of the year. Just like a hotel room. In addition you never have to deal with the tenants. they do it all. Now, where i think there is great opportunity is University City (92122) right next to La Jolla. Condos are a great deal here and renting them is no problem. The students from UCSD gobble them up as rentals. Rule of thumb is $700-800 a bedroom. So a 3 bed. condo could go for $2100-$2400 a month. In addition there are lots in the 300-400k range.
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Prices have been descending fairly dramatically in many areas of North County and many are reporting that this trend is likely to continue for some time.
If you also believe this to be true, I would suggest looking for investments which will provide positive cash flow at this point (rather than looking for properties to flip). I do believe in holding a property for appreciation, however, the market will likely take quite a bit of time turn and move in a positive direction.
With respect to where to look, there are a lot of great opportunities all over the county now.
I'd suggest first considering the market you expect to target (young adults, young families, eldery, etc). Once you've done that look at areas that continue to be highly attractive in terms of location, (such as near the beach for young adults, in a terrific school district for young families, centrally located near services for the elderly). Given the likely continued economic decline, you may want to avoid "fringe" areas/markets at this time. Once you've found a property, buy it right! Try to find something in distress where you can negotiate a good deal for yourself. By negotiating your purchase well, you will be able to offer potential renters more incentives while still maintaining a postive cash flow.
Hope this helps... Good luck with your search.
(Just so you know I am not a realtor, however, I am a real estate analyst and cover most of the major markets in San Diego and Southern Riverside counties...)
The La Costa Resort is probably your best investment property in the North County area. These condos are in high demand during the summer months and will generate very good rental income. Some of the remodeled 1-bedroom units can generate $55K+/year gross.
IMO you don't want to put 20% down and just have a "break-even" investment "hoping" it appreciates some day. If you do, your cash-on-cash return will be terrible. You want to have at least $300+ NET positive cash flow after PITI + hoa + a % for vacancy, repairs, hoa due rises, special assessments, etc... I think one of the main things beginning investors make a mistake on is not correctly calculating the TRUE costs of owning rentals. Too much wishful thinking.
IMO many of the areas mentioned in Carlsbad and Encinitas will not cash flow enough with 20% down. The cash-on-cash return will not be good with the large down payment needed. Buying in those areas is a "hope" it will appreciate long term and that is where your return will come from. And even if a property appreciates, you can't "realize" appreciation unless you sell. And when you sell you only get to "keep" 60 cents on the dollar of the appreciation after paying capital gains tax, other taxes, closing costs, fix up, Realtor commission, depreciation recapture, etc...
Also with condos you have to factor in that HOA dues will rise over time. They can easily rise $100+ a month over a few years.
Below is a very encouraging article from realtor.org about investment properties.
If you have any question, please don't hesitate to contact me.
Here is the article:
Rents Keep Rising as Demand Soars
Daily Real Estate News | Tuesday, February 28, 2012
Rents nationwide continue to be on the rise, increasing 2.4 percent in January compared to a year earlier, according to new data released by the Labor Department. Demand for rentals remains strong. The apartment vacancy rate fell to 5.2 percent, marking its lowest level in more than a decade.
Rents have most been on the rise in tech-centered cities like San Francisco; Austin, Texas; and Boston. Rents also are rising in New York City; Washington, D.C.; Chicago; and Seattle.
Construction of new apartments has been slow to catch up to the increase in the demand. As such, the limited supply has caused prices to move up. In San Francisco alone, rents have risen nearly 5 percent in the last year, according to Reis Inc.
By the fourth quarter of 2011, about 2 million more households were renting compared to 2004, Kenneth Rosen, a professor of real estate at the Haas School of Business at University of California, Berkeley, told The New York Times.
A recent survey of more than 3,000 renters by Apartments.com found that 33.6 percent of those who were looking for an apartment this year say they are previous home owners (up from 20.5 percent in 2011).
â€œThe fact that more renters are entering the market continues to create a series of challenges for the potential renter, including fewer apartments to choose from, which can drive higher rent rates,â€ says Chris Brown, vice president of product management, Apartments.com.
Source: â€œRents Keep Rising, Even as Housing Prices Fall,â€ The New York Times (Feb. 25, 2012) and â€œMore Previous Home Owners Are Looking to Rent in 2012,â€ RISMedia (Feb. 26, 2012
I can provide you a copy of the report I created if you are still interested in NC investment property.
CA DRE #01775528
Not many properties in San Diego pencil but the market is a lot better now than a couple years ago.
One of my favorite areas for beginning investors is Oceana, a 55+yrs community in Oceanside. You don't have to be 55 to own them, just to live there. Condos are selling for around $200k and rent for $1200-1300/mo. In my experience, Seniors make great tenants.
There is also a bank owned condo in Encinitas listed for ~$285k in a nice complex that would rent for $1600/mo.
If you want me to email you the listings or show you some properties just let me know, firstname.lastname@example.org or (760) 822-8008.
If you are seeking cash flow, you might want to consider either the La Cost Chateaus in Carlsbad's La Costa--or North Coast Village at the beach in downtown Oceanside. Both developments offer consistent occupancy and strong cash flow.
If you would like to discuss these options, call either Mike at 760-402-9102 or me at 877-818-8197 to discuss cash flow real estate opportunities in North County San Diego.
The area of Valley Center, CA is a booming counry town. We now have a sewer and and extension is going in on the sewer. There are a few commercial properties available, real good buys on some very fine homes and we have great schools. Oh yes, our main thorough fare thru town in being widened to 4 lanes for a much easier flow of traffic. This is a find area to raise children, horses, dog, have avocado or citrus groves, faulous views and just nice people. We are near Palomar Mountain so you can gao to the observatory, we have Bates Nut Farm which is great for the entire family and we have Western DAys over the Memorial Day Week end. Valley Center is a very family oriented little town but we do have all the modern conveniences. Come check us out. Sandra Rockefeller-Farmer, Coldwell Banker. e-mail email@example.com or my cell 760-638-0311 Have a nice day
One thing I am impressed by are the answers from both Tony and Sandra. We have found that what you mostly get on this site are opinions, not facts. You really cannot get the answer to your question without consulting a Realtor. Interview two or three and look for straight talk and professionalism.
Best of luck,
Mark & Kari Shea
Shea Real Estate & Investment Group
That's a good question which a lot of people are asking these days. I guess it is important to know if you are trying to get some positive cash flow, or are trying to flip, or hope to gain from an area's appreciation. Also, the price you are willing to spend will greatly influence the neighborhood choices.
Yes, some parts of North County, or some property types, have had prices fall more than others, but that does not necessarily mean they are the best buys for an investment. I'd be happy to discuss further should you wish to call or email me.
I am an agent with Realty Executives, North San Diego County, we have alot of great properities available currently as I am sure you are aware of. I would be happy to meet with you to discuss what your criteria is. If you give me an idea of your price range I can then pull up properities and discuss neighborhoods and rental income potential.I think its a good idea to contact a couple agents that work in this are and get a feel for their expertise. I look forwarad to hearing from you.
I have worked with Mark Shea and his team numerous times and would most strongly recommend them to you. Mark has specifically handled a few clients for us looking for investment property in south California and we have always been impressed with his professionalism. They specialize in investment property.
The Schaffer Realty Group