There's a block on Utah Street in North Park where three fourplexes traded in the last 18 months. All built in the 1960s, all roughly the same bones. One sold for $1.45M. Another, two doors down, closed at $1.62M. The difference? One seller had renovated two of the four units to market rent. That's it.
I've been in this business 25 years and I still think small multifamily in these urban neighborhoods is one of the most misunderstood plays in San Diego real estate. People chase flashier deals. They look at big apartment complexes in East County or condos downtown. But a well-located fourplex in North Park, Hillcrest, or University Heights gives you something those don't: rent growth driven by walkability and lifestyle demand, not just housing supply.
Here's what I tell my investor clients. Run the numbers on a value-add fourplex like this. Say you buy at $1.5M. Two units are already turning $2,200 a month. The other two are occupied by long-term tenants at $1,400. When those units naturally turn over (and in this area, average tenancy runs about three years based on what I've tracked through MLS history), you renovate and bring them to $2,400 or more. Your gross monthly income jumps from roughly $7,200 to over $9,200. That changes your cap rate, your cash flow, and your refinance position.
The mistake I see people make is forcing the turnover. They buy, try to vacate immediately, and burn through holding costs while units sit empty during renovation. Patience is the whole strategy here. Buy right, improve as units turn, and let the neighborhood do the heavy lifting.
Mission Hills and Hillcrest fourplexes are harder to find and price higher per unit, but they hold value like few other pockets in the city. University Heights is still slightly under-the-radar for investors, which means better entry points. North Park sits right in the middle, both geographically and in terms of pricing.
One thing I'd push back on: the idea that you need to be "all cash" to compete for these properties. I've closed fourplex deals this year with conventional financing. Sellers care about certainty of close more than cash. A strong pre-approval, a short contingency period, and an agent who actually picks up the phone still win.
What's the rent gap between your current units and market rate? That number is your entire thesis.