6 Great Reasons to Own Rental Property in San Diego

San Diego Map

[photo credit: SanDiego.org]

Like much of coastal California, San Diego is an expensive place to buy property. Even if you have a flexible time frame for purchasing along with cash in hand, finding reasonably priced rental properties can be a challenge, to say the least.

So why put in the effort? Well, it turns out there are some great reasons to own rental property in San Diego. Here are six:

1. Rentability

In San Diego, now is an awesome time to be a landlord. Vacancy rates are very low, close to 4 percent for the entire San Diego County. If you have a rental property that is in decent condition and priced at market value, you will most like have multiple applications from which to choose. Which means it’s easier to find great tenants.

2. Rising Rents

According to the real estate data base RentRange, rents for single family homes in for San Diego rank 10th in the nation for rising rents. In San Diego, rents rose 13.6 percent during the period from the third quarter of 2014 and the third quarter of 2015. Even better, the San Diego County Apartment Association stated the increase was greater at 20 percent from a year ago. They reported that rents have increased more than 44 percent from 2005.

A NOTE: Rental prices across the U.S. have increased at about two times the pace of the median hourly wage growth, which was a mere 2.1 percent from last year. I believe rental owners do need to be wary of squeezing good tenants out of the rental market. We need to recognize that we have role in the big picture of housing in the US. Finding that balance will be the subject of a future blog post.

3. Increasing Property Values

Home prices in San Diego County increased 0.6 percent between the two months of August and September, and they have increased 6.6 percent from September 2014. This monthly increase ranked as one of the best in 20 large real estate markets, and the annual increase ranked seventh. This is according to the Shiller Home Prices Index tracked by Standard & Poor’s. The index began with the cost of housing in each of those 20 markets in January 2000 by affixing them with a value of 100. They subsequently tracked each movement in the markets. San Diego’s value was 216.62 in September 2015, meaning that home values had more than doubled in those 16 years. This reflects the second fastest increase in home prices, and is just behind Los Angeles.

4. Population Growth

Population growth remains a critical factor in producing the rising demand for housing. San Diego County’s population increased an average of close to 33,000 people for each of the two past years. Some of this is due to a higher rate of births over deaths, but some results from great employment opportunities that continue to attract new residents to move here. The California Department of Finance estimates that the population of San Diego County will increase by around 31 percent by 2060 for a total population of 4.07 million residents.

5. Short-Term Vacation Rentals

San Diego has approximately 12,500 short-term rentals, and the region is quickly becoming the most rapidly growing market in the country. Average rents in several beach communities reach over $4800 versus $1800 for long-term rentals.

6. Climate

You can’t sing enough praises for the perfect climate in San Diego, which has approximately 145 sunny days and 117 partly cloudy days each year. Because the climate is so mild, particularly along the coast, many vacation rentals do not require air conditioning. From the standpoint of a real estate investor, this means greater life expectancy for both exterior and interior materials. With some drought-tolerant landscaping, your property should be relatively low maintenance, especially compared to properties in the mid-west and northeast.

These are just a few of the reasons San Diego is the quintessential place to own investment property. This marketplace can’t be beaten!

4 Terrific San Diego Landlord-Tenant Law Sources You Need to Know

If you own rental property in San Diego, you’ve found a great rental market to invest in. And while you may be concerned about finding tenants and keeping your rental units occupied by good renters, you also need to be aware of the numerous federal, state, and local laws that affect how you manage your rental units. You especially need to be aware of fair housing laws. Despite the best of intentions, sometimes it’s easy to unintentionally violate the law.

San Diego California, city skyline at sunset on a beautiful summer night with lighted skyscrapers and downtown buildings

There Are a Few Layers of Fair Housing Laws to Figure Out

Federal, state, and local governments have a say in fair housing law and rental discrimination. The federal Fair Housing Act applies nationwide, and prohibits discrimination based on race, color, national origin, religion, sex, disability, and the presence of children. At a minimum state and local governments must enforce fair housing laws to protect these “protected classes.” In addition, state and local governments may also expand these protected classes to include more groups.

What Are the Protected Classes in San Diego?

In addition to the protected classes listed in the federal Fair Housing Act, the state of California also has it’s own fair housing laws that make it unlawful to discriminate in housing based on:

  • Marital Status
  • Sexual Orientation & Gender Identity
  • Military/Veteran Status
  • Use of a service or assistive animal
  • Sexual Orientation & Gender Identity

But what does it mean to not discriminate against a protected class? We’ve put a list of online resources and education sources so you can figure out the best practices when it comes to fair housing laws.

Keep in mind that these laws are in place for a good reason, and once you establish a system that keeps you organized and in compliance, you won’t find them pretty straightforward.

Our Top Resources For Fair Housing Law in San Diego

  • SanDiego.gov Fair Housing Page: Provides many resources for those with fair housing questions, and they issue a quarterly newsletter that provides very useful information for landlords, including how to deal with assistance animals, information on free fair housing trainings for housing providers, and more.
  • The California Fair Housing Handbook: Although put together in 2012 to promote fair housing in Sacramento, this comprehensive handbook is a great resource for fair housing in California.
  •  California’s Guide to Tenant Landlord Responsibilities: Designed to be a guide for landlords and tenants, this guide is currently available online only, and addresses many facets of owning and managing rental property in California, including fair housing and unlawful discrimination, and other topics such as deposits, evictions, and repairs.
  • The California Apartment Association and the San Diego Apartment Association offer education and other services, including information on how to comply with state and federal laws, including fair housing laws.

Do you have any great resources for landlords? Any practical tips for complying with fair housing laws? Let us know! And remember, that if you’re a rental property owner and you’d rather leave the details, and rent collections, and repairs, and tenant screening to someone else, there are lots of great professional property management companies in San Diego.