Real estate investing in San Diego can be a lucrative venture. You might be surprised to learn that the cost of entry is reasonable when compared to other popular cities in California.
Despite the city's promising rental market, many investors still struggle to make a profit. Some even find themselves making costly mistakes that are avoidable.
As an investor, you must learn to avoid a few key mistakes! North County Property Group has put together a few tips for what to avoid as a San Diego investor!
1. Failing to Understand Real Estate Investing Basics
You'll need to understand the basic terms and how to calculate the fair market value and reliable rental estimates. You must also understand concepts such as GRM (gross rent multiplier), the capitalization rate, and how to calculate them. These metrics will be key in understanding the performance of your investment.
You also need to know the costs associated with buying property in San Diego and what the rental market is like. It’s worth noting that the rental market can change rapidly in parts of San Diego. A fantastic investment in a neighborhood can be a dismal one just two blocks away.
Ultimately, proper research is key to making a good investment choice, as there are plenty of great options out there if you know where to look!
If you want a property partner in order to benefit from their extensive knowledge of the San Diego rental property market, consider the San Diego property managment experts from North County Property Group! We are known throughout the San Diego region as the top property management company thanks to our reputable services.
2. Using a Stock Market Mentality to Approach Real Estate Investing
Investing in real estate is not something you can hop into spontaneously. It will take some time to learn the ropes. One of the mistakes new real estate investors make is comparing it to the stock market.
Real estate is a non-liquid investment and also takes time to earn significant returns, unlike the rapid turnovers of the stock market. Expect to be involved in the game for quite a while. Real estate is a long-term investment that requires expertise, time, and commitment.
3. Not Having a Strategy
You have to be clear about what your goals are. If you enter real estate investing without a solid plan, you can quickly find yourself veering off course from an investment outcome you’d hope for.
You must know things such as how many properties you wish to purchase and for what price. Will the properties be single-family residences or multi-family residences? Would you be interested in a terrific condo deal? How long do you intend to keep these assets? Working with a property investment advisor like North County Property Group can help you solidify your goals and build a clear path to attaining them!
4. Ignoring the Possibility of Repairs and Renovations
This is a common mistake among newer investors. You’re excited about finalizing your purchase agreement for your new rental investment. However, it’s when you’ve started on getting the property rent-ready that you realize there are issues with the foundation, electrical, plumbing, and/or HVAC system. All these systems require substantial work to make the property ready for tenants.
In situations like these, having a solid support system in place is the best preventative measure. It would be best to collaborate with a reputable team like North County Property Group that can help you avoid such a scenario. The property of choice will be thoroughly inspected, allowing you to skip any unwanted surprises.
5. Selecting the Right Property and Neighborhood
There are a number of elements that go towards selecting the ideal property for your investment. Property, being an immovable asset, must always be considered as an extension of its location. As we’ve mentioned before, even a couple of blocks of distance can make a big difference between the outcomes of one investment property compared to another.
We would also advise that you choose a property in a neighborhood with a history of high capital growth or high rental demand. Be on the lookout for such neighborhoods, and also consider climate concerns that may impact certain houses such as beachfront properties.
6. Not Being Up-to-Date With Neighborhood, City, and State Laws
Let us give you an example. Previously, there was no rent regulation in San Diego. However, as of January 2020, a new regulation prohibits property owners from increasing rent to any amount that they’d like. This rent cap ensures that landlords do not overcharge their tenants. It could’ve caused problems if you’d been unaware of the change in legislation and continued to charge above the rent increase limit.
You need to stay on top of local, state, and federal laws. You also need to ensure that you are in compliance with zoning ordinances and the provisions of the HOA (Homeowner’s Association). Furthermore, you should also be familiar with the Fair Housing Act that touches on tenant discrimination.
Keep up with the latest legislation. Make sure that your interests are safeguarded. Impose policies on your property that adhere to the rules of the community and the city. Knowing property laws is one of the best ways to ensure your rental property’s success.
7. Not Being Diligent with Finances
You need to make sure that you can afford the property you want to buy, and not only the base price of the house. After all, you have other financial needs that must be met. There are also numerous financing methods in real estate that you can take advantage of, the most prevalent being a mortgage.
Make sure you correctly plan and allocate your available resources and select the most appropriate financing option for your situation. North County Property Group can help with this!
8. Property Maintenance Is Infrequent, and Vendors Are Inexperienced
If you don't address your property's maintenance issues right away, those problems can quickly spiral. Paying attention to periodic maintenance ensures that your home is safe for your tenant to reside in. It also protects the condition of your investment long-term.
If you're hiring someone to do the repairs, make sure they're insured and licensed. Vendors who have not been vetted pose a more significant financial risk to your company. If they are untrained, you could end up spending way more than otherwise would’ve on repairs just to fix their mistakes. Thankfully, North County Property Group only uses the services of the top vendors in the area!
If you’re looking to purchase, sell, or manage a San Diego investment property, then North County Property Group is the right team to help you!
We have expert property investment services to help you meet your financial goals. With our Investor Program, you can benefit from market data, consultations, and investment property searches conducted by our professional team. We also have services geared specifically towards owners of multiple properties.
We have all your investment needs covered! Contact us today to learn more about our services.