Has the beautiful scenery and thriving housing market of San Diego piqued your interest?
Have you heard about the incredible property boom happening and want to get in on it?
Smart thinking. San Diego is a great place to begin looking for houses to flip!
San Diego may be expensive but it’s a worthwhile destination for property flippers. You’ll want to ensure you know the basics and San Diego-specific tips before jumping into flipping houses in San Diego.
- Why Should You Consider Flipping Houses in San Diego?
- Is Flipping Homes in San Diego Profitable?
- Where To Flip Houses in San Diego: Best Neighborhoods
- Home-Flipping in San Diego in 5 Steps
- Costs of Flipping Houses in San Diego
- Do You Need a License to Flip Houses in San Diego?
- Other Cities to Look At for Profitable House Flipping
- Wrapping Up
Why Should You Consider Flipping Houses in San Diego?
San Diego may be one of the best cities in the nation for house flipping. With a strong economy, steady population growth, and a housing market that keeps expanding, you should absolutely consider flipping a house here.
- Low unemployment: The 3.8 percent unemployment rate has been on a downward trend over the years. There’s a strong economy here with plenty of jobs to support a steady housing market.
- Population growth: More people are moving to San Diego each year, with a slow rise year-over-year in the San Diego population of around 0.76%.
- Solid forecast: Local real estate groups forecast a strong year ahead of home price increases, so you can feel safer in your investment.
Is Flipping Homes in San Diego Profitable?
Yes! Flipping homes in San Diego can be profitable if you make smart decisions. With the strength of the housing market and high demand, home values continue to steadily rise across all of San Diego. This creates a perfect opportunity to make a profit.
The investment may be considered lower risk, as well. Home values remain steady in a strong seller’s market. While it may be hard to get your hands on a property, you should have no problem flipping it and selling it for a profit.
Keep in mind that the median home price is around $1 million, so initial investments here will be significantly more than in other cities or towns. Classic coastal California prices!
Where To Flip Houses in San Diego: Best Neighborhoods
San Diego neighborhoods are pretty expensive and relatively new. That’s why you should search for your flip in some of the older neighborhoods with more affordable houses.
City Heights is a northeastern neighborhood in San Diego County that offers more affordable and older houses. With a median listing home price of $650,000, you can find homes for sale that are less than $500,000. This is rare in San Diego.
There is currently a more balanced market compared to other neighborhoods, meaning that you may have an easier time and less competition with these properties.
Otay Mesa West
Otay Mesa West is in southern San Diego County and sits right on the border of Mexico. The homes in this area are more affordable than downtown San Diego or the coastal neighborhoods, but still in the medium range for home prices.
You can expect to pay around $700,000 for a house in this area. The balanced market with over 40 homes gives you a better chance to get your hands on a property than the intense seller’s market seen elsewhere.
Home prices are trending up 3.9% year-over-year here, so you can feel safer about your investment bringing in returns.
University City is in the northern coastal part of San Diego County. It’s near many of the Universities in the area and therefore has a thriving rental market. If you look to flip homes in this area, keep in mind that the best approach may be to create shared living designs for college students who rent in the area.
The average home price is higher in this area, sitting at $775,000 but there is a greater variety of home prices. While the $2+ million houses bring the median up, there are also older properties that sell in the $500,000s. The representation of more expensive homes in the neighborhood will bring the price up.
Home-Flipping in San Diego in 5 Steps
If you’re ready to dive deep into the flip process, follow along to ensure your investment properties become a smart and successful source of income!
Step 1: Find Properties
You’ll need to find properties that interest you. It can be intimidating when you’re looking at the entire city, so it’s best to start by narrowing down what you’re looking for. Figure out your price range, and the neighborhoods you’d want, and start looking for houses that match.
One of the best ways to find houses in San Diego is by using multi-listing service websites. While many of these are free for anyone, others are only accessible by working with a real estate agent.
You can decide whether or not a real estate agent is worth the expense to you. If it’s your first time buying or you’re new to house flipping, it might be a good idea to use a realtor to ensure the process goes smoothly.
When looking for MLS sites to use on your own, you can start by looking through the set:
- San Diego MLS
Step 2: Learn Everything About The Property
Spending extra time to ensure that you know everything about a property will save you money and time later on. The best thing you can do in house flipping is avoid all surprises by doing things right the first time.
As you find houses you’re interested in, start diving deep into the important information to know. You can talk to the owners, realtor, and neighbors to learn more.
Since you’re often looking for run-down and cheaper properties, you’ll want to do everything you can to make sure you’re aware of the problems. If you can see some big ones, it might mean you’re missing some other, even bigger ones.
Hire a contractor or home inspector for homes that you’re serious about. They’ll know what to look for, especially in that neighborhood or area if they’re local.
Step 3: Offer, Purchase, Plan
When you’re confident you’ve got the one, you’re ready to make an offer. Before you do this, you’ll want to be confident you’re not offering too much.
Use the 70 percent rule to calculate your maximum purchase price. This formula requires your house flipping plan to be laid out. You will need an accurate prediction of your after-repair value and renovation costs. It will then give you the most that you should offer on the house.
Before you offer, make sure you can fund your flip. Due to the risk of house flipping, you may need to consider hard money loans because many traditional loans won’t be approved. Hard money lenders each have unique contracts so read carefully before signing.
Once you have your plan and money, make that offer!
Step 4: Fix and Flip!
It’s time to flip! You should already have your plan for the rehab costs. Get your materials and laborers and start flipping the house.
It’s best to start with larger projects in case anything pops up that will cost more than you expect. It ensures you complete the biggest value adds first to solidify your investment.
Look into what features are in high demand and increase the market value of homes in the San Diego area. RedFin lists these add-ons as the most valuable right now:
- Bike path
- Large backyard
- Open concept kitchen
- Large lot
- Center island
- Single level home
- In-suite laundry
- Breakfast bar
- New roof
Step 5: Sell The House!
Once you complete the repairs, you’re ready to list the house and reap the profits.
It’s a smart idea to use a realtor if you’re new to the property market. It does cost more but ensures you follow all the right legal steps and get the best price for your property. Reach out to local real estate agents and find one that you get along well with. You want them to feel like a partner to help.
You’ll list your home across MLS sites and respond to offers. It’s best to list the home in as many places as possible so many buyers see it.
Once it’s sold, you can start looking for your next project!
Costs of Flipping Houses in San Diego
Flipping houses in San Diego will be expensive compared to other cities. Almost all the expenses you have will be more than if you were to do a project elsewhere. It’s one of the most expensive places to do it! However, keep in mind that it does pay off because you can list the house for much more.
The initial investment of the property will likely be greater than $500,000, as there are very few properties for less than this in the area.
Labor costs are more expensive as well. If you’re building a new part of the home, expect to pay around $200-400 per square foot on labor. There is always the option to do the work yourself to save money. House flippers call this sweat equity.
Closing and selling costs will be anywhere from 2-5% of your total sale. The best way to lower this expense is to do the marketing yourself or get a real estate license so that you don’t need to hire an expensive agent. Other parts, like transfer taxes and property taxes, are unavoidable.
There will be hidden costs throughout the process, such as holding spots and capital gains taxes. Keep in mind you’ll need to be paying for insurance on the property while you have it and any utility bills it accrues.
Do You Need a License to Flip Houses in San Diego?
No, San Diego house flippers don’t need a license to flip houses.
Many house flippers do get their real estate license if they start flipping houses consistently. There are many benefits to doing this, such as:
- Access to multiple listing service websites
- Access to more income streams if the market shifts out of your favor for flipping
- Decreased closing costs
- Greater knowledge to predict market trends
- Stronger network
Other Cities to Look At for Profitable House Flipping
If San Diego isn’t what you’re looking for, consider these other cities in the U.S. for your house-flipping journey. They offer strong housing markets and more affordable options.
- Flipping Houses in Dallas: Dallas currently has one of the strongest housing markets in the nation with a great forecast for the future. It’s a safe place to invest with a great community of house flippers.
- Flipping Houses in Austin: Austin is recovering from a tough year for house flippers, but the forecasts are looking much better ahead. Smart choices may put you in a less competitive market with great returns.
- Flipping Houses in Chicago: Chicago has an incredible selection of older homes in neighborhoods that are growing quickly. Housing prices are increasing and it’s smart to get in on the action.
Hopefully, this article helped you decide if San Diego is the best place for you to flip a house. It’s important to keep in mind that it’s one of the most expensive places to do it, but the payout should be equally as profitable!
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