Owners of lofts in downtown San Diego enjoy some financial advantages in 2018: market conditions are clearly in their favor if they wish to sell or rent their units thanks to continuous socioeconomic development. If you wish to rent out your loft, you can do so with the comfort of knowing demand will be healthy. With median rental rates higher than $2,050 per month for apartments across San Diego, your downtown loft is bound to rent for a lot more, particularly if it is located in a prime or trendy district.
As with any financial endeavor, renting a downtown San Diego loft is not without risk. Many of the risks listed herein present the potential of something going wrong even though the likelihood is negligible.
1. Late Payments
Late payments are the most common risk of renting out a property, and they should not affect loft owners who plan ahead and build a cash reserve equivalent to three months’ worth of mortgage, utilities, and association fees.
2. Troublesome Tenants
The scariest risk in renting a loft may be having a bad tenant, especially if you have been able to cultivate a good relationship with your neighbors and members of the homeowners association. A bad tenant is not someone who is late paying rent or utilities. In fact, landlords should assume renters will be late from time to time. A truly bad tenant would be someone who is a nuisance or uses your loft for illegal activities.
Some tenants may choose to turn your loft into their own Airbnb-like property. To prevent this, your rental contract must be clear on the number of tenants and how long overnight guests can stay.
In San Diego, Airbnb is now collecting occupancy taxes from tourists, but you may have to worry about your own tax filing situation changing due to the additional income you derive from renting your loft. The risk is that you may end up in a higher tax bracket.
5. General Liability
As a landlord, you will be responsible for providing a safe loft structure. For instance, if an overhead fan falls on top of your tenant, he or she will expect you to cover the medical expenses. For this reason, you should look into landlord insurance policies.
6. Market Conditions
Renting your loft means taking it out of the market for the length of the lease contract. If real estate conditions start deteriorating quickly, you may not be able to sell your loft fast enough to avoid a major loss.
7. Property Damage
Tenants are not known to take the best care of the properties they rent. You should expect wear and tear of your loft, but there is also a risk that tenants may cause structural damage to the unit or the common areas of the building. Once again, proper insurance coverage can prevent major headaches.
From Columbia District to East Village, San Diego lofts are available to purchase, whether you want to rent your property out or use it as your primary residence. Get in touch with 92101 Urban Living to see the latest listings. Call 619-649-0368, and one of our friendly agents would be happy to assist you.