Investing in property isn’t one-size-fits-all, and those who are new to real estate investing will be shocked at how many different types of investment properties there are in San Diego.
For the new and seasoned investor, here are the top types of investment properties you can find in San Diego.
Most who are just dipping their toes into real estate investing start by purchasing a single-family home. They are prevalent across most San Diego neighborhoods and highly sought-after by prospective tenants.
Condos can be a great investment option for those who can’t reasonably afford a single-family home or have a specific area they want to invest in (Downtown San Diego, East Village, Gaslamp, etc) where there are fewer single-family homes. Keep in mind that while condos are usually less expensive than standalone homes, they almost always have HOA dues that need to be considered.
Multifamily Homes (up to 4 units)
A property with multiple units, whether separate structures or apartments, qualifies as a multifamily property. However, four or fewer units of properties still fall under a residential property classification. Once there are more than four units, they get classified as commercial properties. Residential multifamily investments are excellent for new and seasoned investors because they have lower vacancy rates and often have great rent growth potential, especially in San Diego. Therefore, these assets can be easier to finance because they don’t appear as risky to banks.
Multifamily (5 or more units)
Multifamily properties with five or more units are classified as commercial assets. They are highly desirable San Diego investment assets because of their multiple income streams and low vacancy rates. Because they are commercial properties, their financial requirements differ from residential multifamily properties.
Retail investment properties are any commercial property with a retail tenant, including fast food, entertainment, and storefronts. They can have high returns and often have far lower tenant turnover rates. However, one of the downsides of retail is that when they become vacant, it can take a long time and considerable financial investment to secure a new occupier.
Office properties often get overlooked by most investors. They can be purchased as entire buildings or as units similar to condominiums. For decades, offices were excellent and stable investments, but the recent pandemic made many investors wary of this sector.
Medical buildings are a highly sought-after investment class. They generally produce stable incomes, and those in desirable locations are usually easy to release. In addition, because medical services will always be required, commercial investors view medical offices as safe and lucrative. These buildings can be as small as a private dental office to a large healthcare center.
Industrial real estate investing attracted many investors during the pandemic as more businesses migrated online and warehousing requirements increased. Industrial properties include warehousing, manufacturing, distribution centers, data centers, and showrooms.
For new investors, residential properties are often the most desirable assets. However, when purchasing an investment property, it is essential to ensure that the price, income, expenses, and financing all lineup. The Simpson Team can help you analyze a property and find the best finance option.