What Are the Biggest Mistakes that San Diego Real Estate Investors Make?
Late 2008 and early 2009 investors came out of nowhere swooping up a good portion of San Diego real estate and buying properties up cash. Between January of 2009 and January of 2010, 8,452 properties were sold for cash in San Diego County. I had the honor of working with many an investor, and still do. If you are considering purchasing a property to fix or to flip, here are some pitfalls that you’ll want to avoid.
1. Don’t Go Overboard – The old saying of “Lipstick on a Pig” is not enough, but sometimes you can see an investors entire bank account wrapped up into one single property. These are usually creative investors, sometimes they buy a home that is too big for the neighborhood, or overbuilt a home until it was too big for the neighborhood, sometimes they start with 10K in mind for the fixup work and then realize that they they’ve racked up 30K more in materials and labor. Plan this well, you want a small house in a big neighborhood, doing quality work is fine, don’t go overboard.
2. Lipstick on a Pig – We probably all know one of these, the investor that does the absolutely minimum to put that house up on the market. The house has been painted, but underneath it all you can feel that it’s still a pig. I can’t tell you how many clients these investors are missing, especially with the San Diego market being the way that it is right now. A buyer will usually walk into that home, look around, put their nose up, and walk right out.
3. Do Your Due Diligence! – Sometimes experience can make you jaded. Investors that have done numerous flips sometimes take it for granted that they can handle any situation, only to find out that they purchased a home with serious structural issues, and now it is going to cost a lot more money than they had planned to fix it up. This is a big problem, I have seen investors in San Diego forego the home inspection to save $400.00 and later have to spend 50K more than anticipated just to be able to sell the house. The home inspection is very important!
It’s an exciting time to be in the real estate market right now, supply has come down considerable since 2006/2007, interest has picked up and prices are still very low.
SEE ALL PROPERTIES ON THE SAN DIEGO REAL ESTATE MARKET
When explaining the relationship of a home inspection to a home warranty, consider the inspection as a physical checkup and the warranty as an insurance policy.
When explaining the relationship of a home inspection to a home warranty, consider the inspection as a physical checkup and the warranty as an insurance policy.