Study Confirms San Diego Fairs Poorly For Wealth Building (San Francisco: apartments, rentals)

[jnojr]

Originally Posted by Sassberto

So what we're basically saying is that the only way to build wealth in SD is to be a landlord

Why would "we" say that? Why couldn't someone have a good job, rent, save, invest, build wealth... then move away and buy somewhere else?

A lot of people build wealth in San Diego without real estate. And an awful lot of property owners here will never be "wealthy".

[someguy10]

Originally Posted by Sassberto

So what we're basically saying is that the only way to build wealth in SD is to be a landlord - I actually completely agree with this. Most people will never make enough money to build wealth here, and even if you bought high you will end up ahead, it just may take longer. I've never imagined SD as a place you move to build wealth, it's place where the already wealthy move to so they can have a nice life.

Problem is not everyone wants to be a professional landlord, and the assumption is, if you're managing property, that's sacrificing somewhere else, i.e. your career. I don't have the desire to spend all my free time to manage and maintain an additional property on top of my demanding job, 2 kids, working spouse etc. I placed all my bets on my career and kept my cost basis of life low even when my income went up, but I'm in a big minority in that regard.

I always like to say, most people's biggest accomplishment from living in San Diego will be... living in San Diego.

You summed up what I was trying to get at better than I said it. Another way I've heard it said is southern California is a great place to be once you're already wealthy. I wouldn't say it's impossible to build wealth outside of landlording in SD, just that it'll be faster/more in other places.

As I mentioned before, a lot of landlords who "make money" are not fully accounting for all costs (especially non-regular expenses and vacancies) and/or making only paper gains. Also, not accounting for their own time if they self-manage.

I found rental real estate to be mildly profitable, but the amount of time and stress it took and also the requirement to be hard-nosed (evictions -- inevitable if you have enough time/properties in it) just weren't worth it. I found focusing myself on one money-making activity to be the best in terms of both money and happiness. But to each their own.

[eastcoastbias]

Originally Posted by Sassberto

So what we're basically saying is that the only way to build wealth in SD is to be a landlord - I actually completely agree with this. Most people will never make enough money to build wealth here, and even if you bought high you will end up ahead, it just may take longer. I've never imagined SD as a place you move to build wealth, it's place where the already wealthy move to so they can have a nice life.

Problem is not everyone wants to be a professional landlord, and the assumption is, if you're managing property, that's sacrificing somewhere else, i.e. your career. I don't have the desire to spend all my free time to manage and maintain an additional property on top of my demanding job, 2 kids, working spouse etc. I placed all my bets on my career and kept my cost basis of life low even when my income went up, but I'm in a big minority in that regard.

I always like to say, most people's biggest accomplishment from living in San Diego will be... living in San Diego.

I see eye to eye with a lot of what you post. Again, This is very true.


I don't know what SD is known for- I'm sure someone may post that there are three or four good industries but aside from Tourism and industries related to tourisms what is one field that stands out relative to the costs you will incur here???


You don't move to SD to pursue great opportunities in the "fill in the blank" field.


I know quite a few older land/property owners that bought 20/30/40 years that are sitting on homes paid off but are at 10X more than what they bought 20/30/40 years ago. That is a source of wealth. Many areas of the country this is unheard of. I consider this a unique opportunity here.


The others have bought when market is in a down swing and make a considerable source of income when things are doing well.
BUT a large portion of these folks, don't manage the properties well or could careless about managing them well and the properties are in a sad state of affairs being rented out each year. One friend I have has two rentals (inherited) makes $600.00 side cash when all is said and done each month. Has months were nothing is made (repairs), deals with phone calls and emails, anxiety when going on vacation, working with contractors some unreliable. Not a worthwhile side gig in my opinion especially with kids and a family. I think I'd become a DIY expert (save money)and put the places up for sale. I don't think its worth the time over the long haul. However, buying low flipping higher completely different story, but you have to have the capital here.

[NYSD1995]

In San Diego your income never keeps up with inflation but your rent beats the market every time.

I recommend to folks on the fence about staying here long-term - if you're going to stay, buy something you can afford, in the long term it will even out.

[GuyInSD]

Originally Posted by someguy10

...you basically want monthly rent to be roughly 2% of purchase price for a property to truly cash flow positive in the long run...

methinks there's something wrong with that algorithm.

By that reckoning, my first rental should have started renting out at $5560/month in 2002 (equivalent to $8862/month today) in order for me to actually make any money on it.

Guaranteed, a 3 bedroom 2 bath townhouse near UTC wasn't renting for that much then, or now - and yet I've somehow managed to make significant $ on it, and I'd hazard a guess that other landlords in the area have as well with their properties (we're not doing this for charity), while charging about as much as I do for rent.

[GuyInSD]

Originally Posted by jnojr

Why would "we" say that? Why couldn't someone have a good job, rent, save, invest, build wealth... then move away and buy somewhere else?

A lot of people build wealth in San Diego without real estate. And an awful lot of property owners here will never be "wealthy".

that's another way...but if you're going to go that route, you DEFINITELY want to spend as little as possible on housing costs while you're doing it - no reason to pad someone else's bank account instead of your own...

[mysticaltyger]

Originally Posted by LagunaMom

Phoenix???
They pay you in sunshine.

So does SD, but the cost of living is much lower in Phoenix.

[mysticaltyger]

Originally Posted by jnojr

Why would "we" say that? Why couldn't someone have a good job, rent, save, invest, build wealth... then move away and buy somewhere else?

A lot of people build wealth in San Diego without real estate. And an awful lot of property owners here will never be "wealthy".

I live up in San Jose but this is what I have been doing the last 20 years. The pay here is better, though, but my income is below average for the area. I still save at least 25% of my gross income, though.

I know I am a weirdo in this regard, but getting rich=weird no matter what, since most people in all but the highest income brackets are broke.

[LuvSouthOC]

Originally Posted by mysticaltyger

I live up in San Jose but this is what I have been doing the last 20 years. The pay here is better, though, but my income is below average for the area. I still save at least 25% of my gross income, though.

I know I am a weirdo in this regard, but getting rich=weird no matter what, since most people in all but the highest income brackets are broke.

Very impressive. I wish more people had this kind of common sense.

[sdurbanite]

Originally Posted by USDefault

Of course there are exceptions. But how many big companies have their "main headquarters" in San Diego? Answer: not many.

Just because SD isn't a headquarters city doesn't mean people aren't getting paid well.

This link is a couple years old but Census data shows that San Diego has the 5th highest percentage of people with salaries over $150,000. The usual suspects top the list...SF,SJ, DC and Seattle

The 33 richest cities in the United States | WGN-TV

According to this VOSD article, only two Fortune 500s are headquartered here, Qualcomm and SDG&E. And out of the top ten employers, six are directly tied to government (i.e. the Navy, universities, county government, etc.). And there's this: "Census data shows small businesses dominate in San Diego County. Less than 1 percent of the region's companies have more than 250 workers."

Sure and what the article fails to mention is that 99.7% of all businesses in the country employ less than 500 people. Data is from 2010 census, but I can't imagine the number has changed much.

Snippet from article below:

Small Business by the Numbers

As of the 2010 Census, there were 27.9 million small businesses registered in the United States, compared to just 18,500 companies of 500 employees or more. Included in that total figure are sole proprietorships (73.2 percent), corporations (19.5 percent), and franchises (2 percent). 52 percent of small businesses are home-based. The most important thing to note? 99.7 percent of U.S. employer firms are small businesses.

Are Small Businesses Really the Backbone of the Economy? | Inc.com