Oceanside Real Estate Investments: Consider the "Hard Working" 92057 Zip Code

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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?
zip codes have best potential if I plan to keep the properties for long term (5/10 years)?

I said:

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.


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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Investing for individuals on a small scale is so risky.  There are so many things they never dream would impact their long term ROI.

I also like to research the owner/rental stats to see if the investor owned/rented percentage is trending up or down.  Declining neighborhoods tend to increase in the percentage of rental units and depresses the rents dramatically. 

Also, if there are condo buildings in the area, are they FHA/VA approved?  If not, they will contribute tot he percentage of rental units in a community. 

We can't predict the future, but we should understand the trends. 

One addititional month with a vacant rental unit can eliminate any hope of breaking even for a year.

This is really tricky business and not for the average consumer/would be investor.

That's enough thinking for today.

Jun 24, 2008 11:31 PM #1
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