Common Risks Involved with Downtown San Diego Real Estate Investing

June 15th, 2015

While a good many millionaires will agree that their fortunes were made in real estate, the honest ones will also tell you that they’ve probably lost a few fortunes in real estate along the way. This is a risky business and every Downtown San Diego property purchased doesn’t always pan out to become a successful investment. There are many risks involved in real estate investing and you would be going to battle unprepared if you didn’t take a moment to carefully study these risks and work to avoid them when planning your property investment strategy.

Unfortunately, there are very few one size fits all risks for real estate investing, as each type of investing is inherently different. This means that each type of real estate investment will involve a new set of risks. Below you will find a brief overview of different styles of investing and the common risks that are involved in each.

Downtown San Diego Rental Properties

This type of investing offers some risks that are unique and some that are also risks when investing in properties that are or rent-to-own. First and foremost is the risk of failing to make a profit. If the Downtown San Diego Condo in question cannot achieve an adequate monthly income to cover the expenses of operating the property then it is not a solid investment.

Other risks include the risk of getting bad tenants. This is particularly hard on first time investors. Bad tenants are costly and in some cases destructive (which leads to even greater expense). Vacancies are another risk for rental properties. These properties are only costing money as they sit empty rather than earning money as they were intended. Short turnovers are in your best interest as are long-term tenants.

Flipping a Downtown San Diego Condo

This is one of the most enjoyable types of Downtown San Diego property investments for many ‘hands on’ investors. This allows the investor to roll up his or her sleeves and take an active role in creating the masterpiece that will eventually bring in serious revenue (at least that is the hope). This is also one of the riskier investments, particularly when trying to turn a profit in what is known as a buyer’s market.

The risks are simple but often overlooked and they can have a significant impact on the overall success or failure of the project. First of all, the biggest risk is in paying too much for the property. Other risks include underestimating the costs of repairs, over estimating the ability of the investor to do the work him or herself, taking too much time, experiencing a down turn in the Downtown San Diego housing market, becoming overly ambitious, and getting greedy. Sometimes it is much better to walk away with a lesser profit than to end up loosing money by holding out.

Personal Residence

Keep in mind that your personal home is essentially an investment. The intention is that your home will gain in value over time and that equity in your home will build as you age. There are risks involved in this transaction as well. Buying a Downtown San Diego Condo that is in a ‘borderline’ area or one that is not showing obvious signs of growth is one of the biggest risks. This puts your home in the position to lose rather than gain value. This can make your home a burden rather than the investment it was intended to be. Other risks involve is becoming involved in a loan situation that is not at all beneficial (such as an adjustable rate mortgage or an unreasonable balloon payment).

Perhaps the biggest risk of all when purchasing a personal residence as an investment is failing to get a proper inspection that could rule out potentially costly and even dangerous problems within the home your purchase for you and your family. Toxic mold is one problem that comes easily to mind that most proper home inspections would almost immediately rule out. Others include structural problems that are costly to repair and dangerous to leave in disrepair. Each of these risks should be considered before an offer is made on any property.

For those seeking to turn impressive profits in short order, Downtown San Diego real estate is one way in which this can be accomplished. It is in your best interest however to be aware of the risks that are involved and take careful steps to minimize those risks. Taking these steps now may cost a little more on the front end but in many cases the pay off for doing so well outweigh the expenses.

The Latest Headlines

Downtown San Diego April 2014 Events

Taste of Leucadia Apr. 3 Join the Community in celebrating the culinary flavors and local libations that make our Leucadia Main Street district so unique. Highlights our local restaurants, retailers, craft brewers......

read more

Role of the HOA in the purchase of your Downtown San Diego Condo

“When buying a condo, we are all seduced by the decor, the ambiance, the view, and other visual effects, when we should really be checking something else that is not visual! The......

read more

Watermark San Diego Market Updates

Watermark – Market Updates Influenced heavily by European architecture, The Watermark is located at 650 Columbia Street in the Marina District. It features a variety of residences and amenities as well as......

read more

Meridian San Diego Market Updates

Meridian – Market Updates The Meridian is a luxury residential condominium development that offers panoramic city, bay, and ocean views. Amenities at Meridian include 24-hour security, men’s and women’s health clubs, guest......

read more

Little Italy San Diego Market Updates

Little Italy – Market Updates With views of the San Diego Bay, old-world restaurants, charming shops and parks, downtown San Diego’s Little Italy has a small town feel in an opportune urban......

read more

Questions to Ask when Financing your Downtown San Diego Condo

“Home finance has blossomed into an incredibly diverse and complicated industry. This is good and bad. There are at least a hundred ways to borrow the money for your Condo now. There......

read more

El Cortez San Diego Market Updates

El Cortez – Market Updates The historic El Cortez, designed by Walker & Eisen Architects, has become a treasured landmark in Downtown San Diego since its completion in 1927. Built on the......

read more

Downtown San Diego February 2014 Events

San Diego Lunar New Year Tet Festival Jan. 31-Feb. 2 In celebration of the Lunar New Year, a Vietnamese cultural festival will take place to showcase homeland traditions. Experience ancestral rituals and......

read more

Gaslamp Quarter San Diego Market Updates

Gaslamp Quarter – Market Updates Well known as the heart of downtown San Diego nightlife, the Gaslamp Quarter is comprised of a plethora of retail shops, upscale bars and taverns, business offices......

read more

Hawthorn Place San Diego Market Updates

Hawthorn Place – Market Updates Hawthorn Place is located on the corner of Hawthorn and India Streets in Little Italy. Hawthorn Place stands at the heart of an ideal lifestyle that combines......

read more

Get Listings and Articles Delivered Straight to your inbox