Dear Landlords and Investors,
The principles of leverage, supply, demand, and ROI still push appreciation. San Diego has proven to be a wise location for your investment dollars. But, don’t become complacent. Don’t lose track of why you are investing, regardless of how successful you are. Dealing with unexpected issues can make or break your business. So of course, you’re right to want to understand how the current market affects your property values. You deserve expert guidance. Here are details on what you need to know now:
Gotta love your investment acumen!
We’ve had many friends, family, and associates complaining about their equity holdings over the last month or two. But not one of our owners of rental units! Tortoise and the hare story. Slow and steady wins the race in the end. Oh, and they love the way leverage works, along with rents. Both allow such HUGE returns on their self-amortizing properties’ value.
Winterizing San Diego Style (No don’t get out the snow shovels…)
With your rent increases, you prob have more money set aside. Now is the perfect time to have some things checked out before the rainy season hits. Items like roofs, doors, windows, stairs, landings, balconies, railings, appliances, smoke and CO2 detector batteries, LED light fixtures, and bulbs. Being proactive is your wisest move.
We have talked about the SDGE Energy program before. The county has one too. Here are the links to both:
https://www.sdge.com/residential/savings-center/rebates/multifamily-rebates
Water saving is in everyone’s best interest. Lyle turned off most of his sprinklers a couple of years ago. Another option is drought-resistant landscaping.
https://www.sdcwa.org/your-water/conservation/
What makes a 2-4 Unit property a potential deal?
When scouting out potential good deals the Gross Rent Multiplier is the item we use most. It’s the quickest, easiest, way to determine if a property looks interesting. We have found most listing agents are not familiar with how to figure a cap rate. Lots of times they forget to include expenses like insurance or the gardener. This throws off the figures they put into the MLS. Which skews the data we’re counting on for analyzing the property.
We’ll run the GRM for all the active listings on the market to start. Along with taking into consideration:
• The location- a safe and stable rental market that is close enough to drive to collect rent or meet a handyman.
• Bedroom and bath configurations- the larger the units the more rent.
• The ability for rent raises- abiding by the local rent control laws.
• If the property has garages, storage, extra parking, or laundry. (Lyle’s 4 plex in Escondido has 9 extra parking spaces beside the ones in front of the garages and a laundry room.)
• The possibility for improvements down the road.
• Any other items that will increase value.
The next step is to look at the closed comps in the neighborhood. Comparing their GRMs to the subject property. This helps us determine an offer price and accurate value. Of course, we check the sale price of those closed comps too.
There isn’t a magic GRM number that makes a property stand out. The lower the better for a given location. The average sold GRM in Escondido will be different than say, Pacific Beach. Markets are different. Rents and demand vary. Some listing agents, (who don’t have a lot of experience with multi-units) don’t even put the rents or GRMs into the MLS. They don’t understand the importance of including that type of info.
We were talking with one of our investor clients today about a couple of the buildings he owns in Escondido. He mentioned how glad he was to own there instead of by the beach. Fewer issues with vacancies and turnover on his bread and butter type units. When he compared them to the higher rental properties closer to the coast.
Bookmark-Worthy Links
San Diego Real Estate YouTube -Weekly Videos Keep You Connected
Rentometer -House and Apartment Rental Rate Comps
HomeBot -Personalized Home Finance Tool
ALTOS Reports -Powerful Data-Driven Real-Time Zip Code Market Updates
MLS Access for Investment Property -Custom Searches For Investment Property
San Diego Apartment Investors Market Report Archives -Access Past Market Reports
IT’S TIME FOR YOU TO GET THE ROI YOU DESERVE.
You’ve worked hard for what you’ve earned, and you’re right to want the best experience. Be confident you have professionals on your side. We use ROI-based marketing. Rest easy knowing we use an organized system to market your property. Employing our highly targeted and proven approach like no one else is what you deserve!
Thinking of selling your property in the next 12 months? Call us today for your strategic marketing consultation at 858-218-4511.
