5 Real Estate Investment Tips for New San Diego Property Investors

If you’re preparing to purchase your first San Diego investment property, we have five real estate investment tips that are sure to help you navigate the process. Owning rental real estate can be lucrative and rewarding. It also comes with challenges and risks. We know this because we’re investors ourselves. 

When you partner with experienced San Diego property managers and experienced real estate experts, you’ll have a much better investment experience in America’s Finest City.

Here’s what you need to know.

1. Your Real Estate Investment is a Business

Real estate can quickly become emotional. However, you need to detach yourself from the property. It’s not your home that you’re going to live in. It’s an investment. It’s a business. 

Every decision you make needs to be based on data and facts, not emotions. 

You don’t have to love the property and you don’t have to insist on some of the upgrades and amenities that you might require for yourself. Think like a tenant, and invest in a property that will earn you consistent rental income and appreciate in value. 

2. Set Investment Goals and Expectations 

You won’t know what you’re looking for if you haven’t established your investment goals. The reasons you have for investing are unique to you. For example, perhaps you want to rent out a property to short-term tenants and tourists. That’s going to require a completely different strategy than an investor looking for the stability and consistency that comes with long-term tenants. 

It’s important that you understand the why. Why are you investing? What do you hope to earn in cash flow and appreciation? Will you hold this property for one year or 10? What is your exit plan?

Knowing the answers to these questions will help you focus in a crowded and competitive market. 

3. Make a Budget and Stick to It

Investing in real estate requires a lot of number crunching. It goes well beyond the actual purchase price of the property. You also have to budget for fixed and variable costs. You’ll know what you have to spend every month on your mortgage, taxes, and insurance. However, you never know what you’ll spend on maintenance and repairs. You don’t know how long of a vacancy you’ll have or what you’ll do if there’s a fire or a flood or an earthquake. 

Create a financial plan and be prepared for unexpected costs. Stick to your budget and make sure you have the necessary reserves to cover surprise expenses. 

4. Know the San Diego Rental Market 

Before you invest, it’s important to do some research so you understand the rental market in San Diego. Once you own property and want to rent it out, understanding the nuances and trends of the local market is essential. This knowledge will help you: 

• Price your property appropriately
• Market your property to the largest number of potential tenants
• Make the necessary updates and upgrades to attract great tenants

You need to know if most of your tenants will be families looking for good schools, professionals who want an easy commute to work or retirees who will want access to recreational and entertainment activities. Find out if the area is walkable or if a car is necessary. All of this information will help you buy the right investment and prepare for how you’re going to rent it out. 

5. California Rental Laws

Renting out a home in California is riskier than ever, thanks to a number of tenant-friendly laws that have been passed in the last few years. You need to understand rent control, just cause evictions, and security deposit law. Get to know the fair housing regulations and how Section 8 rules have changed when it comes to screening a tenant’s income. You’ll need to know how to structure your lease and what the recent eviction moratoriums have meant for the rental housing industry. 

There are a lot of laws and they’re complex. If you don’t have the time or the experience to stay up to date, make sure you partner with a legal expert or a property manager.

The most important thing you can do as a new investor is to hire a professional San Diego property management company. Don’t wait until you’re ready to rent the property out to tenants. Get in touch with a management company before you invest. You’ll get a better idea about what you can earn and how you can prepare.