Investing in rental property can be a smart move, especially in the San Diego market, which is strong, and continues to grow. But, you have to do it right. How do you know if a San Diego property is worth your investment dollars?
The investment decisions you make today will determine how you must manage the property tomorrow. If you’re still in the purchasing process or you’ve just started looking around at potential investments, you have time to make and execute plans that will result in a profitable and successful experience for you.
When you’re evaluating properties to buy, look for those that will reduce your vacancy, increase your rental income, and attract the best possible tenants to your rental property.
Your goal, as a real estate investor, is to purchase a property that will rent quickly for the highest rents. Knowing the difference between a great investment property and a problem property will shape what you buy and where you buy it.
We know that the market can feel a bit unpredictable. Don’t make the mistake of buying the wrong property, however. It’s worth your time to slow down, evaluate properties carefully, and decide whether they fit into your investment goals and your strategy for earning great rental income and stable, long-term ROI.
Here’s how you’ll know if a property is worth your investment in San Diego.
A Good Location Leads to a Good Investment Property
Every investor understands the importance of location when it comes to real estate transactions.
Examine vacancy rates across San Diego and its different neighborhoods. You’ll want to focus on areas with lower vacancy rates and where rent values are high and climbing even higher. Investing in these areas will deliver a higher return on your investment. You’ll have less trouble earning cash flow, and you won’t have to worry about long periods where you’re not earning any rental income at all.
The best rental property location is an established neighborhood that’s a good mix of owner/occupant homes and rental properties. You want to buy in an area where people tend to stay, or where rental values are appreciating.
You’re not looking at a good investment property if it’s in a location where rental rates have declined. Even if you find what you think is the perfect property, nothing is going to change its location.
The location equation includes a number of things such as:
Proximity to good schools
Easy transportation and parking
Local recreation and entertainment
Availability of shopping, grocery stores, and other conveniences.
More and more tenants are choosing public transportation, bikes, and walkable neighborhoods. Quality residents are always looking for homes that make their lives easier and more enjoyable.
Worthy San Diego Investment Properties are Well-Maintained
Are you considering an older property that needs a lot of work because the price tag is so attractive? It certainly seems like a good investment; you’ll spend less, and you’ll be able to put your own personal touches on the property as you renovate it.
It’s not always a strategy that works, however, especially if you’re eager to get your property onto the market and into the hands of good tenants. Instead, it’s better to pay more for a well-maintained property that has a solid structure and good foundation.
Cosmetic repairs and updates are to be expected, however you don’t want to invest a lot of time and money renovating a property that has really suffered or is difficult to imagine living in anytime soon. If this is your investment strategy, you’ll need to have some great vendors and contractors lined up to make the repairs quickly. The longer you spend fixing up your rental units, the longer it takes to earn any money on them.
A property that’s worth your investment is ready to rent right now. Have the home inspected thoroughly by a professional inspector and a local San Diego property manager. This will give you an idea of what you’ll have to do to get it ready for the rental market. If the cost and the timeline are too prohibitive, you might want to look for something else.
What are the Rent Control Laws and HOA Rules?
Before you buy an investment property, make sure you check out the laws, regulations, and HOA codes that may affect you and your tenants. Each community has different ordinances and requirements for landlords. In San Diego, you’ll need to understand fair housing laws, rent control laws, just cause eviction laws, and security deposit requirements.
Maybe you’re looking at a multi-family building with six or seven units. If it was built more than 15 years ago, you’ll need to be aware of the rent control laws and just-cause eviction restrictions that will apply to your property. A single-family rental home, however, will not be subject to the same restrictions on raising the rent.
Know how the statewide tenant protections will impact each property you’re considering.
It’s also important that you know what the HOA rules are. Otherwise, you can end up paying heavy fines for violations. Some associations have rules about waiting periods when it comes to rental properties. There might be limits on how many homes in the community can be rented. You don’t want to buy an investment property and then learn you can’t yet rent it out.
Consult with San Diego Property Managers
Before you select your investment property, talk to a local San Diego property manager.
You’ll need access to a lot of rental information, and you’ll want to know how much work it will take to prepare the property, attract a tenant, and maintain the home. Property managers do this every day, and we have the information that you need.
Consider our perspective when you’re getting ready to purchase a home.
We can visit the property with you and assess whether it will make a sound real estate investment.
We can tell you what you’ll pay for maintenance costs.
We can estimate how quickly it will take you to rent the home out,
We can talk about what types of rental income you can expect.
You’ll be glad you got this advice before you buy. Great property managers can keep you from making costly mistakes now and when you have tenants in place.
Ultimately, a property that makes you money is worth your investment. If you’d like some help, please contact us at North County Property Group.
