SUBSCRIBE: ‘Rental Market Update’

    Join us every Saturday morning at 8:00 AM for the San Diego Rental Market Update on AM600KOGO, hosted by Aubrey Morrow, Bill Exeter & Doug Taber

    Week of 03/29/24 – San Diego Rental Market Update

     

    Aubrey Morrow, CFP
    Welcome back to financial advisors happy early Saturday morning, I’m certified financial planner Aubrey Morrow and joined on the radio but this time every Saturday, the fellows will check with us at the nine o’clock hour and they’ll be chatting with Doug Taber gives a certified commercial investment member. Doug’s with the rental housing Group at Keller Williams and a fellow Marine veteran. Doug specializes selling apartments and rental properties. Bill Exeter is CEO of Exeter 1031 exchange services. Bill has over 40 years in the exchange business and been involved more than 125,000 1031 exchanges. So Doug and Bill, hello.


    Doug Taber, CCIM
    Hello Aubrey, Hello Bill. And to all my fellow Christians out there, happy resurrection weekend. Christ is risen.


    Aubrey Morrow, CFP
    Thank you and Bill Exeter, are you with us?


    Bill Exeter
    I’m here every good morning on this. I think Curie Saturday morning although I think we’re going to have some serious rain.


    Aubrey Morrow, CFP
    Yeah, and hopefully, the kiddies can find their Easter eggs. And we’ll celebrate what it’s all about tomorrow. But then Tabor, you are in the real estate business place. Maybe give us an update on the California Southern California real estate. And also, Doug, as you chat with people that have gray hair, I can only say like, like Aubrey. and I were people that own property a long, long time before they sell it all happily and then get unhappy on April the 15th. When they pay or reduce tax. You tell them all about 1031 exchange. So Doug, give us an update and then B lexicon and you remind us what a 1031 exchange is all about. October Oh, you’re

     

    Doug Taber, CCIM
    Alright, as you know, Spring has sprung and the spring breakers are having a great time. The Easter weekend events are getting ready to unfold. And the reality is a lot of folks are out there trying to find homes to purchase but like those elusive easter eggs, they can’t seem to find them. And there’s just not enough properties on the market. Currently, it’s just been that way. You know, we’re always lacking inventory here in San Diego County, southern California. And for those folks that are out there trying to find that perfect dream home. They are very elusive. Couple that with our high interest rate 7% On average right now. And it makes for the home buying process in San Diego County and Southern California very difficult. The good news is for those who own these properties, the huge demand means that their prices are going up. Our median home price in San Diego is just over 1,050,000 and that’s up Aubrey $50,000 from last week. So the prices are continuing to go up for our two to four unit properties. You know I spent a lot of time in that rental market asset class the price per unit has actually increased to $541,000 per unit that’s up $46,000 from last week so you know your duplex triplex four Plex properties, they are in high demand, especially in mid city. And then our commercial apartment buildings, they they’re still around the 4% cap rate, which means that they’re doing well. So all the values are holding strong. So again, if you own properties, you’re certainly still sitting in the driver’s seat. If you’re looking to buy a property, not as easy to do, I know there’s a lot of frustrated people out there right now trying to find a home and you know, as we get more and more influx of individuals coming into our counties, the housing shortage just keeps on stacking up and we’re just not finding enough places for people to live in our vacancy rates are hovering right around the 5% mark and that certainly is driving the average rent growth up. Right now the mark average market asking rent is almost $2,500 a month. So even the renters are getting pushed of great concern sell the property insurance. Gosh, I got another call this week from an owner of a four Plex in mid city who has been contacted by State Farm. He is insured by them and they’re going to be canceling his insurance early next year. So the challenge is when those owners get their insurance policies cancelled, they go out into the marketplace and just trying to find it Insurance, we hear that their policies are increasing by 300, to 400%, really, really a big issue, the state hasn’t done anything to address it yet. And these insurance companies have lost so much money already that they’re just bailing out of the state. And now we have another issue that, as you probably know, we’re going to have to face come April 1, there’s going to be a new minimum wage, that’s going to go into effect, and that’s good. If you’re a first time worker, you’re going to get a pay increase to $16 to $20 an hour. Challenge is, it’s not only going to be bad for the fast food restaurant owners, but it’s also going to affect property owners, you know, when you think about how difficult it is not only to get the materials to make improvements on property, but now when you have all of these laborers that are going to be charging, you know, higher minimum wage, due to the state, now, it’s going to put the squeeze on owners as well. So we’re not going to, we don’t know what the effects of that’s going to be. But, you know, as, as this new legislation, these regulations don’t allow owners to make as much money, you know, with rent controls, now you have the cost of everything going up, insurance is going up, labor is going up. And at some point, there’s got to be a, you know, for a market to work, there’s got to be some sort of profit to make it even worthwhile. But we’ll keep an eye on that. And that’s really the update for this week. And we’ll just enjoy the weekend and not worry about all these challenges.

     

    Aubrey Morrow, CFP
    You know, Doug has kind of an interesting situation, if people are looking for a place to rent, and there’s such a big shortage, interestingly enough, and a big demand, it kind of depends on which side of the coin you’re on. If you are a renter, you’re really spending a lot of money just to find a place much less, I have to pay for it. On the other hand, if you are, if you have gray hair, and you’ve owned a rental property for a long, long time, it is an interesting time, they’ll gives you mentioned the average, the median price of a home is a million dollars. And certainly if people are having a rough time getting a down payment, and then paying high mortgage rates. So it’s an interesting time for the flip coin if people own investment property. And as you said, incredible time and I think it has to do a kiddingly say with the color of your hair. It’s always been trials and tribulations for people that renting and the people that are buying that have black hair. But interesting time also Dilt Billy Exeter, for people that have gray hair, that own investment property that are selling at incredible prices will be election or make sure you remind our listeners if they have gray hair and they own property for a long, long time. And it’s an investment property they need to know when a 1031 exchange is because if you watch our webinar today, folks, a couple on a property some 30 years had $3 million of equity would have paid over a million dollars in taxes, I think that earn and learn what a 1031 exchange is all about. So be able to share that with our listeners, Bill.

     

    Bill Exeter
    Sure. All right. In fact, a lot of people, you’re probably familiar with it in terms of being called a 1031 exchange, but other folks will call it a tax deferred exchange or like kind exchange. So it’s really all the same thing. You’re selling real estate that has been held for rental investment or business use. And you don’t want to pay the capital gains taxes or depreciation recapture taxes. I mean, let’s face it, none of us like paying taxes. So the government gave us this 102 years ago, where you are allowed to defer the payment of those taxes as long as you reinvest and you reinvest at the same or greater levels and where you were at. So if you sell a million dollar asset you buy, you know, either one or multiple properties with our total purchase price is a million or greater. And that allows you to defer all the taxes so it keeps all the money in your pocket. You don’t pay the federal government, you don’t pay the state government. And it makes it easier for you to reinvest and buy more property, buy more units trade up in value and hopefully increase your cash flow and your net worth.

     

    Aubrey Morrow, CFP
    And folks, if you own investment property, you know, 1031 Exchange has been low 102 years and about 20 years ago, another law was passed allowing people to do a 1031 tax deferred exchange. And again, they can continue being an active owner just like Bill is mentioned. But potentially people can learn the benefits of being a a passing owner by owning partial inches are really really big commercial properties outside of California, where these properties are structured to produce you monthly tax sheltered income with appreciation potential, all about any property management responsibility. And folks, that’s exactly what we cover at our webinar today at 10 o’clock. So up until the nine o’clock hour you continue chatting and listening to Bill Exeter and Tabor and Aubrey and again take a break from nine to 10 and Fire up your computer folks at home at home and fire up your computer and type in three words on your home computer. And those words are rental owner workshop.com, rental owner workshop.com. And Doug Bill and I take a case study, again of a couple of school teachers that own property some 30 years, they got tired of what we call the tenants and toilets and trash and hassles of owning property. They wanted to get rid of property management, they want to have more time with their kids and the grandkids do some traveling. And they had lots and lots of equity, and paying lots of taxes because their depreciation and interest in owning property has pretty well diminished. And again, they want to learn how to sell their property and defer all those taxes. as to exactly what our case study is all about. I think you’ll find it really, really interesting. And you can watch our case study today, folks at 10 o’clock at home. So take a break from nine to 10 after this radio show for Apple computer and type in three words on your home computer. Those words are rental, r e n t a l rental owner, o w n e r rental owner workshop.com. And I think you’ll find it very informative, very interesting. And we go over literally about six exit strategies for owners of highly appreciated real estate. And we’ll take the pros and cons of each and if you own property, you may want to watch that webinar and learn some strategies that you may not be familiar with as we take a little break on the financial advisors right here on NewsRadio 600k ojio

     

    Transcribed by https://otter.ai