|
George Lorimer at 619-846-1244
Your Home Sold Guaranteed or I’ll Buy It!*
*Conditions apply • ProWest Properties • DRE# 01146839
Is Your San Diego Rental Really Building Wealth?
A rental property may look fine on paper. The real question is whether it is still giving you the best return on your equity.
|
| Get an Updated Home Value Call George: 619-846-1244 Text George |
Owning a rental home or condo in San Diego can be a good way to build a nest egg.
But here is the question most owners never seriously ask:
Is this property still giving me the best return on my equity?
Search Other San Diego Available Homes
Many landlords focus only on the rent they collect every month. That is not enough. You also need to look at how much equity is tied up in the property and whether that money could be working more productively elsewhere. |
Example
Let’s say your rental property is worth $800,000 and you owe $350,000.
That means you have about $450,000 in equity.
Now let’s say the property rents for $2,500 per month, and your monthly costs look something like this:
| Mortgage |
$1,800 |
| Property taxes |
$500 |
| Insurance |
$200 |
| Total monthly cost |
$2,500 |
In this example, you are basically breaking even each month.
|
That break-even number is misleading
It sounds safe, but most owners leave out the real-world costs:
- Vacancies
- Repairs
- Deferred maintenance
- HOA increases
- Tenant turnover
- Leasing costs
- Major fix-up costs before the next rental or sale
And sometimes the property itself is no longer ideal. Maybe the area has changed. Maybe the tenant profile is weaker. Maybe the HOA keeps going up. Maybe too much of your equity is trapped in a property that is no longer performing well.
|
What else could that equity do?
If you took $450,000 in equity and earned a 7% annual return, it could grow to about $631,148 in 5 years.
That is roughly $181,148 in growth.
Or looked at another way, a simple 7% annual return on $450,000 is about $31,500 per year before taxes and fees.
That does not automatically mean you should sell.
It does mean you should stop thinking, “Well, the tenant covers the payment, so I’m fine.”
|
A smarter way to look at your rental
You want to evaluate:
- Monthly cash flow
- Total return on equity
- Property condition
- Location and tenant quality
- Future maintenance exposure
- HOA burden
- Whether there is a better rental property for your goals
Sometimes the best move is to keep the property.
Sometimes the better move is to sell it and reposition your equity into a stronger investment.
|
Options worth exploring
If your current rental is not performing the way it should, you may want to explore:
- Selling and buying a more suitable rental in San Diego
- Moving equity into a higher-performing property outside California
- A 1031 tax-deferred exchange
- A partial exchange
- A reverse exchange so you can buy first and preserve your full equity position
|
Is your rental still doing its job?
Don’t keep a property just because you have owned it a long time. Make sure it is still helping you build wealth the way it should.
If you want to discuss whether you should keep it, sell it, or exchange into something better, call or text me.
Call or Text George at 619-846-1244
Call Now Text George
|
George Lorimer • ProWest Properties • DRE# 01146839
619-846-1244
Your Home Sold Guaranteed or I’ll Buy It!*
*Conditions apply. This is for general information only and is not tax, legal, or investment advice. Please consult your tax advisor, CPA, attorney, and financial advisor regarding your specific situation. |
