Buying An Investment Property in San Diego – 6 Factors To Consider
For some people, the dream of buying a home is about putting down roots. They have plans for family barbecues and Christmases around the fireplace. For these people, buying a home is about buying part of a lifelong dream.
This is not the only reason to buy a home, however. Buying a home in San Diego and its surrounding communities does not have to be a long term commitment. Some people may be looking for a temporary home or a starter home. Others may want to have their options open in case new opportunities arise. Some may even be looking for a good investment property to flip or rent out.
Whatever the case may be, looking for a home that will do well on the resale market takes certain considerations. To get started, consider the following factors.
1. Location. One of the first things people look at when buying a property is location. Most people have an ideal location in mind. However, those who are looking to settle down are often willing to compromise on location to get other features they want. However, for those who are thinking about resale value, the power of location cannot be overstated. When it comes to the San Diego market, the most obvious location with resale clout is coastal proximity. Since San Diego is a beach community, homes that are closer to the water are going to have a significant boost in value. Beachside homes are going to have the maximum benefit, but even homes that are within walking distance will see an obvious boost from location.
The beach is not the only location worth noting in San Diego. There are several desirable neighborhoods to consider, and homes that are within walking distance to the downtown or other historical areas are often very desirable. Along those same lines, homes that are close to public transit are often more lucrative. Another smart place to buy when looking to resell or invest is near college campuses. These areas often see lots of growth and have a high turnover of residents. Purchasing a home in these areas can yield dramatic profits, especially when it comes to renting.
2. Layout. Many features in a home are easy to change. Walls can be painted; floors can be recovered. The right furniture and art on the walls can have a dramatic impact on the way the house looks. However, one thing that is much harder to change is the layout. The way a house flows from one room to the next will have a huge impact on the appeal of the home, and it is very difficult to enact significant changes to the layout of any home. Therefore, when looking for a home for investment purposes, look beyond the simple aesthetics and always pay attention to the layout.
Layout trends have evolved over the years. In the past, homes were often divided up into smaller rooms. However, modern homes often lean toward open floor plans. In these homes, the living room, dining room and kitchen are often joined together, making the space appear larger. In these layouts, there may be fewer room divisions, but the house often seems more spacious thanks to the open areas. Modern homes are also more likely to have fewer, larger bedrooms, and walk-in closets and master bathrooms are almost expected amenities in some markets. Therefore, finding homes with these features is a good indication of added value even if the rest of the home is in less than desirable condition. Sometimes layouts can be tweaked by removing a wall or creating a pass through, but these changes are often time consuming and expensive. Therefore, look carefully and realistically at the layout before buying to make the best choice possible.
3. Views. It may seem cliche, but everyone likes a house with a view. The fact is that San Diego is a scenic area. With plenty of ocean and mountain views, people clamor for any vista of paradise they can find. Therefore, finding a house with a nice view can be a huge bonus when trying to flip a house or leverage it as a rental property. These homes automatically have more property value, which makes them better investments than other properties.
To make the most of such properties, do not be afraid to try a fixer. These homes may have basic aesthetic problems or need some updating. However, if the view is good, then these improvements will definitely pay off. It is easy to change the landscaping and kitchen countertops, but it is impossible to change a view. Many people will even sacrifice other amenities for a home with a view. This can make a smaller home more valuable than other comparable floor plans. Therefore, if you find a home with a good view, be sure to consider it quickly before someone else does.
4. Price. Price is always a relevant factor, no matter what the motivation for buying may be. Everyone needs to create a realistic budget in advance and stick to it. Better still, it is a good idea to get pre-approved for a loan prior to house shopping in order to know exactly what is affordable and what is not. However, buying a home as an investment or to turn back around quickly requires a different kind of shopping mentality. When looking at a home with a long range plan, it is easy to count on a standard mortgage and gradual increases in property values. When looking at a shorter term ownership plan, however, there is not as much room to play with. After all, the price needs to be less about what can be part of a long term plan and more about how to turn a profit.
Therefore, look at homes that are undervalued. Consider homes that need minor repairs or have other small problems. These problems are turnoffs to other buyers, which brings the price down. However, if they can be easily corrected, the home’s value can skyrocket during a resale. Mostly, when thinking about resale value, it is important to never buy at the top of the price range. Always consider the assessed value, and do not make an offer that exceeds that, no matter how tempting it may be.
5. Renovations. When looking for a property to invest in, most people assume they will have to take on renovations. While a home in need of renovations can be a lucrative option, especially for buyers with construction backgrounds, it is important to look carefully at what renovations need to be done. For example, a home that needs new floors and new paint is an easy fix. A home that needs new kitchen appliances and a backyard overhaul is often doable. Once fixes start to include gutting kitchens and bathrooms, it is time to think more critically about the costs. When considering the buying price, factor in realistic renovation costs, preferably with actual quotes from a contractor.
More than that, make sure the full extent of the renovations are known in advance by getting an inspection. Even a kitchen remodel may be within reason, but if the house needs all new electric work and new pipes, then it may be cost prohibitive. Also consider how much time it will take to complete the renovations. If the house is going to go back on the market quickly or take on renters, it is important to have a tight timeline for the work in order to maximize profits.
6. Neighborhood. When looking at a home in terms of its value, it is also worth looking at the rest of the neighborhood. Everyone who buys a home considers if the neighborhood has the desired features, such as mature trees and established families. When considering things from an investment point of view, however, it is important to be more discerning in the comparisons. It is a good idea to gauge the size and condition of the houses on the block. It can also be helpful to look at the assessed values of other homes and the actual market values of recently purchased homes. These features are important because neighborhoods trend together. If a neighborhood has good resale value, the home is likely to retain its value or even gain value. If other properties are less desirable in the neighborhood, then the home will not hold its value as well.
When buying for an investment, it is good to avoid the best house on the block. This type of home will already have maxed out its potential, leaving buyers with little value to gain. Also consider if there are other homes for sale in the area or if there are vacant homes. Too many available homes can saturate the market, diminishing the home’s resale price.
Ultimately, these six factors can help put house shopping into perspective. San Diego has plenty of homes that can lead to profits. Buyers just have to know what to look for in their San Diego investment property.
Article Copyright ©2013 – All Rights Reserved Patrick Belhon