I Own Two San Diego Rental Properties and My Tenants Have Gotten Multiple Noise Complaints.
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Currently Reading: A San Diego Investor who is grappling with long-term vs. short-term gratification with his next (personal) home purchase.
Home 2:
City/State: San Diego, CA
Neighborhood: Golden Hill
Purchase Year: 2024
Home Type: Condo
Home Price: $463,000
Down Payment: $162,000
Interest Rate: 7.0%
Loan Type: Conventional
2 Bed | 2 Bath | 850 Sq Ft.
Age: 29
Job: Company President
Debt at time of Purchase: $590,000 (Mortgages)
Home 1:
City/State: San Diego, CA
Neighborhood: Downtown
Purchase Year: 2023
Home Type: Condo
Home Price: $415,000
Down Payment: $125,000
Interest Rate: 7.0%
Loan Type: Conventional
1 Bed | 1 Bath | 500 Sq Ft.
Age: 28
Job: Company President
Debt at time of Purchase: No Debt
How many homes have you owned?
2
What amenities did your home come with?
1st Property (Downtown) - Gated complex, outdoor patio area, unit came furnished, AC, in-unit laundry, dishwasher
2nd Property (Golden Hill) - Common area laundry, 2 parking spaces, dishwasher
Did you have any debt when you bought or inherited property?
For my first property, I had no debt. On my second property, I just had the mortgages, with no other debt.
Relationship status at the time of purchase:
With a Partner but the Purchase was 100% My Own
Where did you get the money for your down payment or for the property if you paid in cash?
I used my own money
Are you and have you always been solely responsible for your mortgage payment?
Yes
Do you rent out your property/properties?
Yes
Tell us details about the rental income you make from your property and what type of rentals you operate.
Both of my properties are rentals. The first one is a downtown rental. I furnished it with the help of my girlfriend (AKA she furnished it) and I was attempting to rent it out mid-term (3-6 months). I found a long-term tenant and signed a year lease for about $3,300/month, which pretty much covers the monthly expenses.
My second property is unfurnished and is a normal long-term rental in Golden Hill. I am getting $2,850 for rent. My PITI is about $3,000/month so I have slightly negative cash flow.
Note: PITI = Principal, Interest, Taxes, Insurance
How did you plan to purchase your home(s)?
I got updates from my real estate agent of properties in the area that I was interested in so that I could get a feel for the market. I then picked the types of properties that seemed like they could come the closest to cash flowing. Then I would wait until something that felt like a good price popped up, and make an offer.
[Note: if you’re looking for property updates in San Diego, click here.]
Have you/did you feel any pressure or expectation to buy a home? In what way did your family/friends or social circle impact your decisions to buy and/or sell?
My pressure to purchase is just the pressure I put on myself. I feel that real estate is an awesome path to being financially free, so I want to purchase as much as possible.
What amount of risk do you believe you've taken on through the process of owning and/or selling real estate?
2 / 5
If you'd like to explain your risk number, please share.
I think I am buying decent properties that will have minor negative cash flow, but should appreciate long term, and eventually have solid cash flow - pretty low-risk, long-term plays. I also saved a ton in taxes by purchasing these rentals because I qualify as a real estate professional. Each property purchased saved me about $40k in taxes in year 1 from the accelerated depreciation.
“I am buying decent properties that will have minor negative cash flow, but should appreciate long term, and eventually have solid cash flow - pretty low-risk, long-term plays.”
If you could do it all again, would you? Is there anything you would change?
Yeah, I would. I have learned a lot through the process. There isn't a ton I would change because I feel good about what I have bought so far. For my downtown lease, the utilities are currently built into the rental price, which was a mistake. I wish the tenant just paid those and I charged less for rent. I had an unexpected $500 bill for utilities and had to sort that out. It makes more sense for the tenant to manage their own utility costs.
What is next for you in real estate?
I'd like to purchase a home/condo to live in with my lovely lady once my lease is up at my current home that I am renting.
Tell us about your experience with your Realtor (if you have one!)
Awesome experience. With my most recent property, she was critical in making sure the seller didn't cancel on me when my loan process went to shit. The rapport she had with the other agent kept the deal alive until we could finally close.
[Note, if you’d like to be connected with this Realtor, email us at hello@bettermondays.us!]
Tell us about anything unexpected (good or bad) throughout your buying, selling, or ownership experience.
Downtown Property (1 bed/1 bath):
Bad -
It’s a pain to park and get this rental set up, my unit didn't have parking so I have to pay monthly parking at a garage a couple of blocks away.
During the purchase process, my mortgage broker gave me the ok that my loan would close and that I could remove my loan contingency. It turns out they were wrong. I had to request an extension to figure out an alternate solution and to get that extension granted, I had to give back several thousand dollars of a seller credit that had previously been granted to me. I essentially had to give that money back, or they could cancel on me and I lose my deposit. I feel like I should not have removed my loan contingency that fast, but they wanted me to remove it in order to give me the credit that I was requesting.
“During the purchase process, my mortgage broker gave me the ok that my loan would close and that I could remove my loan contingency. It turns out they were wrong.”
Not that bad -
I have some interesting tenants. They are a nice friendly older couple, but definitely have some quirks. I have had a couple of noise complaints from my HOA due to singing on the balcony, and noises in the middle of the night.
“I have had a couple of noise complaints from my HOA due to singing on the balcony, and noises in the middle of the night.”
I went to the unit and got in my tenant’s car in order to teach her how to use the parking garage.
I had an unexpectedly high $500 gas bill two months in a row (this is for a 1 bedroom condo, 500 SF). It turns out electric heaters are massively expensive, especially when using it next to an open door to the outside.
Good -
I get major tax benefits from my rental, and aside from the occasional goofy tenant issue, they are nice people that I enjoy working with. I think the property will go up in value long term.
Golden Hill Property (2 bed/2 bath)
Bad -
Mostly a massive struggle to get a loan. In both of my purchases, I had trouble getting a loan because my business showed a loss on paper. This made it challenging to get me qualified. On this property, I actually had to have my dad cosign with me. I would have been okay to do so without a cosigner, however, my lender that was going to approve it was scared off by our HOA's mediocre insurance policy. This situation caused a month-long delay in escrow and the seller almost canceled on me.
Good -
This property feels like a steal. I got a very solid unit in Golden Hill for $463k. I believe it will go up in value a solid amount long term and it provides massive tax benefits. I have great long-term renters in there, and it requires very little of my attention.
Please add any information that deepens the story about you and the homes you've bought and sold.
The main reason I have been buying property is to build wealth. With the tax benefits I get from being a Real estate professional, doing a cost segregation, and accelerating depreciation, I get big tax savings right when I buy. If the properties come close to cash flowing, it's a win. Long term, the appreciation should be excellent, and the rents should go up. Ideally, I refinance when rates go down and can feel even better about the deals. The challenging part about this, is that it's not sexy at all. If I hadn't bought those 2 properties, I could pretty easily put 30-40% down on a 1.5 million property that would be epic to live in, but it would be shortsighted.
“The challenging part about this, is that it's not sexy at all. If I hadn't bought those 2 properties, I could pretty easily put 30-40% down on a 1.5 million property that would be epic to live in, but it would be shortsighted.”
It's tough because I want to live somewhere epic, but I also want to have long-term wealth, so there is definitely some discipline needed to delay my gratification. I am currently grappling with how nice of a place to buy for myself/girlfriend for this same reason. It seems like the move is to buy somewhere decent, but it could become a rental that I move out of in a year or two.
My goal is to get 3-5 million worth of real estate paid off. That would be enough to provide $300k + in income yearly and feel like I am set for life. That would be a great spot to be in, but does require some shorter-term sacrifices.
The main reason I have been buying property is to build wealth. With the tax benefits I get from being a Real Estate professional, doing a cost segregation, and accelerating depreciation, I get big tax savings right when I buy.
Like what you read or have questions for our homeowner? Drop them in the comments below. *Friendly Reminder: Kindness always wins.
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The goal of Homeowner Diarie$ is to share stories about how others have bought and sold real estate and does not serve as advice, or reflect the views of Better Mondays.
