Attention San Diego Real Estate Investors — We Need To Talk
Posted @ 8:32 pm - Filed under Financing, Market Correction, RE investment strategies, Real Estate Markets, San Diego Property Owners, Selling Income Property, Tax Shelter
Earlier this year I said San Diego real estate prices had fallen to the point of being a strong ‘B-List’ item on local investors’ options menu. I don’t say that as a backhanded complement — merely as a professional opinion based upon solid comparative analysis. That’s my way of sayin’ it is what it is. But that’s not the point of this post, at least primarily. Neither is opining that it’s clear to me San Diego’s real estate values will continue their downward tilt through 2010. Again, an opinion, but based on much data and the feeling in my right knee.
NOTE: Before continuing it’s important to understand San Diego ain’t the Lone Ranger here. There are numerous similar markets. All of SoCal and most of NoCal for example. 
But around the country, whatever I say here about SD is likely to have traction in many, many regions.
Josh and I have been culling through our database looking for folks who’re best positioned to make a high quality move of their equity(s). We’ve been blessed and handicapped simultaneously by the reality of gettin’ up to speed on a brand new piece of database software. The blessing though is far outstripping the irritations of the necessary learning curve involved. It’s a killer program — the best I’ve ever seen. Anywho, we’ve been noticing a disturbing trend as it relates to new loans on investment properties.
Does this describe you?
Property bought way back in the day and even in the last 2-5 years are showing massive new loans on them. I know San Diego’s rental market pretty well, which means it ain’t exactly challenging to figure out these loans don’t make much sense — objectively speaking. For instance, a La Mesa duplex sportin’ a $400,000 5.5% loan simply will not work. Even if both sides rent for $1,350 monthly (not likely), the payments alone would be $2,335 — leaving a whopping $4,380 annually to pay operating expenses on a 40-60 year old building. Believe me when I tell you the operating expenses for that sorta property, even self-managed wouldn’t drop below $8-9,000/yr no matter how you slice it.
Look, I get it. It’s a sign of the times, right? Folks need money so they tap into their income properties. What happened to the money? Was it invested into more solid real estate? Was it used as a stop gap for personal financial trouble? Maybe it was used to pay of other more troubling debt — who knows? I don’t.
If this does describe you, one way or the other, we should definitely talk. You have more options than you currently believe. Whether you’re contemplating a refi or already did the deed, you can improve your status quo. Over the years I’ve learned what the #1 limiting factor has been for most of our new clients — they simply were unaware of a whole page of options remaining on their menu. Sometimes it’s not a whole page. It can be just one. But if it can make a measurably positive impact, one is all ya need.
Think about moving from relatively ancient buildings to newer or brand new properties with equal if not better locations and tenant quality. Also, almost always there’s a huge smile resulting from the major difference in price vs rent. Sorry, but that’s one of the major factors causing San Diego property to land on the B-List in the first place.
We can talk ’till we’re both blue in the face and nothing’s gonna change the hard numbers. Your stuff is relatively ancient. It’s just as likely to be functionally obsolescent as not. Your operating expenses are only gonna get worser and worser as Grandpa used to say. (Much to the chagrin of Grandma.) When you hit retirement with properties as old or older than you are, something was fundamentally wrong with the Plan.
There are moves you can make which will result in a significantly improved position for you as a real estate investor. Your retirement can be moved up on the quality scale with less muss and fuss then you might imagine. Your newly refinanced properties don’t hafta be your new herd of albatross.
The only thing keeping you from learning the options available to ya is avoidance of the subject in general. Let’s talk so you can at least understand what’s possible. The vast majority of folks soon realize they have an unexplored page on their menu. Give me a buzz at 619 889-7100 or send me a note via Contact BawldGuy. Have a good one.
This entry was posted on Tuesday, July 7th, 2009 at 8:32 pm and is filed under Financing, Market Correction, RE investment strategies, Real Estate Markets, San Diego Property Owners, Selling Income Property, Tax Shelter. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
