San Diego is one of the most lucrative real estate markets in the United States. With a population of almost 1.4 million, it’s ranked as the second largest community in California and the eighth largest city in the country. It’s also one of the fastest growing cities in terms of economic development and population. With its steady population growth rate and potential for jobs, many new residents are in need of a place to stay.

Although its thriving economy, has seen real estate prices rise, the good news is that there are still affordable properties available for sale. In fact, San Diego housing prices can still be considered reasonable compared to other expensive housing markets in California.

Since 2000, the San Diego real estate market has seen steady appreciation rates, with an annual growth rate of approximately 5.33%. This means that investing in San Diego real estate is an idea because your investment property will likely increase in value in a matter of a few years.

Another reason why the San Diego real estate market is great for real estate investors is that around 54% of its residents are renting a home. This means that there are plenty of opportunities for those who want to invest in rental properties in San Diego. 

person holding small wood carving of a home in the palm of their hand

If you plan to take advantage of the profitable real estate market in San Diego, make sure to keep these expert tips in mind before buying a property:

Find an Investment Property at a Bargain Price

Since California’s housing market remained strong amidst the pandemic, many homebuyers are having difficulty finding a property that they could afford. However, San Diego is relatively more affordable compared to other markets in the state, like Los Angeles and San Francisco. 

In fact, compared to the high real estate prices in the rest of California, the San Diego housing market still offers properties for sale at a bargain price. With a median home value of around $550,000, it’s still possible for you to find an inexpensive property that’s ideal for investing.

Consider Investing in a Fix-and-flip

If you’re looking for other investment options aside from renting out your current property, a fix-and-flip strategy may be a good idea. Since the population is continuously rising in San Diego, there are many homebuyers looking for a property to buy. You can take advantage of the demand for housing by buying a fixer-upper. Then have it renovated and sell it for a larger profit margin.

interior of a home under construction with ladders and wood panels leaning on wall

If you decide on this path, make sure to plan a budget and include costs for the property’s improvements. Try not to go overboard with the renovation expenses. Remember to invest in improvements that tenants value in a property as well as ones that help increase the property value overall. 

Take Advantage of the Rising Rental Rates

San Diego is one of the cities in California that’s generally considered to be landlord-friendly and doesn’t have rent restrictions. In San Diego, rents are going up at a steady pace. Despite this, there is a massive demand for rental properties, which is great for investors. 

Currently, the median rent in San Diego is $2,700. The average rate for a two-bedroom rental property is $3,395. These rent rates are expected to continue rising given that the projected population in the city will increase by an additional 500,000 in 2050. When buying a rental property look for a neighborhood that tends to charge higher rent to maximize your ROI.

Consider Finding a Property Near Universities or Colleges

San Diego is home to several universities and colleges, such as the University of California, San Diego State University, University of San Diego, Point Loma Nazarene University, and National University. There are also a number of smaller schools and colleges within or near the area. 

group of students throwing their graduation caps in the air

Buying an investment property near these schools allows you to tap into the diversified student market, which is one of the biggest sources of demand for rentals. Since new students are frequently attending these schools, your occupancy rate won’t fluctuate as much because every time students graduate, newcomers will surely move to the area.

Choose Your Location Carefully

One of the most important factors that can greatly affect your investment’s profitability is the location. Before buying any investment property in San Diego, make sure to choose your neighborhood carefully. 

Whether you plan to invest in long or short-term rental properties or fix-and-flips, the best neighborhoods are those that are safe and near desired amenities. This means taking into account the overall walkability of the area and the availability of essential services like schools, hospitals, shopping centers, grocery stores, dining, and banks.

Consider Short-term Rentals

Since San Diego is a very popular tourist destination, it can also be a good location for investing in short-term rentals. If you consider choosing this rental strategy, make sure to choose a location that is near San Diego’s famous tourist attractions.

A few of the most popular attractions are the San Diego Zoo, USS Midway Museum, Natural History Museum, Air and Space Museum, and Desert Garden. What’s more, San Diego also boasts favorable weather conditions and close proximity to the beach, making it more appealing to visitors. 

Bottom Line

It’s important to know your investment goals and conduct property market research before investing in real estate. With these tips, you’re better positioned to make a wise investment. If you still have questions or would like a partner to help you buy and manage your rental properties consider working with a qualified property management company. 

Contact our team at Keyrenter Property Management San Diego to help you maximize your ROI and ensure your peace of mind!