Have you considered the 92057 zip code in Oceanside for your next investment property? We think there is a compelling argument for the long-term property investor. Consider this question on Trulia Voices:
How is San Diego market doing now? Is it good time to buy investment/rental properties?
Which zip codes have best potential if I plan to keep the properties for long term (5/10 years)?
Do a home search for properties in the 92057 Zip code, on Trulia- keep it to under $225,000. Most of these properties sold north of $400K, in 2005. While that was overblown, you can see that there is a lot of room there for growth over a 5-10 year period. They were once valued that high, now they're about half of the 2005 values. Now, click this link- Marine Corps NCOs receive about $1,500-$1700/month for housing (and they spend it).
$20% down on a $200,000 home will have a PITI of about $1,550.
That's positive cash flow, ladies and gentlemen. The challenge for this investor will be that most of the homes were built in the 1970's so he can't get a newer home. He will be able to avoid the Mello-Roos tax so that will make his cash-flow all the more juicy.
Will the property rise to its 2005 values? It may take ten years, like the recovery from the last distression, or longer. However, a down payment and closing costs would be about $45,000 to own this home. The rents will cover the payments and a depreciation tax break wil be available to the owner.
How will the investor receive a 10% return, over a ten-year period? The Rule of 72 says that if the $45,000 doubles, to $90,000, in 7 years, the return will be a skosh over 10%. This means that a sales price of $275,000, by 2015, will get the investor a 10% return. Admittedly, 5.2% appreciation is a healthy return but we think an investor is buying the property right, at these prices.
Positive cash-flow mitigates a helluva lot of risk.