Investing In Rental Properties In San Diego | The Selby Team

The mild weather, proximity to the ocean, and the blend of bustling nightlife and tranquil, family-friendly neighborhoods have long made San Diego a highly coveted destination for renters and investors.

While it's an exceptionally desirable place to live, investors may wonder if the city is still a viable choice for rental property ventures. While we advise you to speak with a financial advisor before deciding, here's what we know about the rental market.

It’s a Landlord Market

Not just the climate and lifestyle amenities make San Diego a solid rental market. It’s also that the city has limited supply due to geographical constraints, zoning regulations, and long permit processes. This limited supply (relative to demand) puts landlords in a favorable position.

Beyond that, the combination of low supply and strong demand continues pushing rental prices up, allowing landlords to charge higher rents—another substantial benefit for investors.

Neighborhoods to Watch

When investing in rental properties in San Diego, choosing the right neighborhood is critical. Here are a few areas to keep an eye on:

North Park: North Park is known for its eclectic atmosphere, diverse community, and thriving arts and dining scene. It offers a range of housing options, including single-family homes and multi-unit properties, making it accessible to a broad spectrum of renters. The neighborhood's relative affordability (compared to beachfront areas) makes it an appealing choice for investors looking to enter the San Diego market without the high entry costs.

South Park: Neighboring South Park shares similar advantages. Investors can find a variety of property types here, and the rental market remains relatively stable, making it a reliable choice for those seeking consistent rental income.

Sorrento Valley: Sorrento Valley has a near proximity to the Miramar military base, ensuring a steady influx of military personnel looking for housing options. It's also worth mentioning that Sorrento is home to numerous biotech companies, which continue to attract young professionals and families.

Familiarize Yourself With AB 1482

If you’re unfamiliar with the 2019 AB 1482, you should know it has added a layer of complexity to property management and rental regulations. We want to emphasize that this law should not discourage you from investing in San Diego; instead, we aim to provide you with information about the law so you can plan accordingly.

AB 1482: The Specifics

AB 1482 imposes rent increases to no more than 5% (adjusted for inflation) or 10% annually—whichever is lower. Additionally, landlords must have “just cause” to terminate a tenancy. Here’s a breakdown of the specifics:

Timing: Under AB 1482, the “just cause” eviction provisions come into effect after 12 months of a tenant's occupancy, as opposed to the standard San Diego Just Cause Ordinance, which applies after two years.

Categories: The just cause eviction reasons under AB 1482 are categorized into: "At Fault" and "No Fault."

• At Fault Reasons: These are reasons for eviction where the tenant has done something wrong or violated the lease terms. Examples include non-payment of rent, lease breaches, criminal activity, and refusal to provide access.
• No-Fault Reasons: These are reasons for eviction that don't involve tenant wrongdoing. Examples include the landlord's intent to demolish or remodel the property, withdrawing the property from the rental market, owner or relative occupancy, or government orders.

Eligibility: AB 1482 originally applied to multifamily units that were over 15 years old. However, this threshold changes yearly, meaning the law applies to properties built in specific years.

For example, in one year, it may apply to properties built in 2005 or earlier, and in the next year, it might apply to properties built in 2006 or earlier. It also applies to properties that a corporation wholly or partly owns. Most other properties are exempt from these specific AB 1482 provisions.

Thinking About Investing in San Diego?

Are you thinking about investing in San Diego real estate? Explore the possibilities with the assistance of The Selby Team. Our experts have insider expertise, in-depth market knowledge, and are here to guide you in making well-informed investment choices. Contact us now!