Advice for a Newbie Looking to House Hack in San Diego
Investor · San Diego, CA · Member since 2020 · 21 posts · 37 votes
Hello! I'm looking to house hack a property in San Diego. I would like to rent out the extra bedrooms to medium term tenants or via AirBnB to short term tenants (after getting the proper city permit) to maximize the rental income.
For the folks out there in the medium term/short term game in San Diego, how is it going? Any advice for a newbie to this strategy and market? I'm currently looking for properties under $700k so most of them have been 3bd/2ba or 2bd/2ba townhomes/condos in Mission Valley, Clairemont, or East Village.
I have already connected with a great realtor, but looking to get other experienced people's opinions.
Mid-terms are working out great. You have a great strategies. Personally I would avoid East Village for my mid-terms.
My recommendation is to get it running prior to Memorial Day. If you enter the STR market in the summer with no ratings, you may have issues with bookings until next summer. This is because the book ahead for summer is ~2 months. This implies many people booking for August are making the booking in June or sooner. If you enter late summer, the bookings will be low and so positive ratings will be sparse, This likely will affect your bookings until at least spring.
Good luck
First off, great idea. I hope the search goes well. A few thoughts.
If you're looking at townhomes/condos, check the HOA docs about rental rules for two possible restrictions.
1. At least here in Colorado where we work, many HOAs are going to prohibit short-term rentals regardless of whether you live there or not. That's where your medium-term rental model might come in.
2. I also see HOAs have a prohibition on renting out anything less than your whole unit (i.e., a prohibition on renting a portion of it or by the room). Will they know? I guess that depends on layout of the condo, how nosy your neighbors are, and how active the HOA is. But it's good to know.
You might check out Erin's Guide to Midterm Rentals. She wrote the original book on MTRs (American Nomads) and she has a bunch of checklists and tips on how to set up and operate a successful MTR.
Whatever direction you go, I wish you the best.
Mid-terms are working out great. You have a great strategies. Personally I would avoid East Village for my mid-terms.
Mid-terms are working out great. You have a great strategies. Personally I would avoid East Village for my mid-terms.
Yes we just going to say this, east village is a mess with the homeless. Please steer away from that area if you're looking to do MTR and STR. Clairemont and Mission Valley are good but you will most likely run into HOAs there which will be a pain. I wouldn't overlook La Mesa, for your price point you could find something there and it's close to hospitals too for mid term rentals for traveling nurses. I know a few people who have STRs in La Mesa doing well.
Thanks for the encouraging words and thoughtful advice on condos. These are things I had already been asking but I did not know about potential restrictions even while living in the property. Will add it to my list of questions. Also, thank you for the book recommendation!
@Dan H.
@Kenneth Donaghy@Steve Meyers
Thank you both for the SD specific advice. I will be wary of East Village and look into La Mesa. As local investors, do you have a recommendation for a local meetup to attend to meet other investors in the area so I can continue learning?
Hello! I'm looking to house hack a property in San Diego. I would like to rent out the extra bedrooms to medium term tenants or via AirBnB to short term tenants (after getting the proper city permit) to maximize the rental income.
For the folks out there in the medium term/short term game in San Diego, how is it going? Any advice for a newbie to this strategy and market? I'm currently looking for properties under $700k so most of them have been 3bd/2ba or 2bd/2ba townhomes/condos in Mission Valley, Clairemont, or East Village.
I have already connected with a great realtor, but looking to get other experienced people's opinions.
Hi @Luis Espinoza,
I have 2 full time STR/MTR's in San Diego - one in Bay Park (this is one unit of a multifamily I own there) and one in Oceanside (large house with a hot tub, etc.)
If you are going the STR route, I will say that bookings are WAY down year over year. I would add to this that, people are either renting your unit to be at your unit, or extremely close to something. If you are renting a house in La Mesa, I don't know that your revenues would be great in this environment, from what I have seen this year.
The MTR route is great if you can purchase near military bases or hospitals here, for military TAD orders or travel nurses.
I have a fantastic property manager for STR's if you would like his contact info - he runs all 7 units that I have on Coronado and about 20 more for clients of mine in San Diego.
I think potentially the most important part of this strategy will be your debt and how you structure it. Do you plan to do a 30 yr conventional? With the roller-coaster in rents from the STR game (for example, my Oceanside place did $20k in July and $1400 in February) I would just want to make sure that you structure a monthly debt bill that is robust enough to ride that wave confidently!
Hope that helps!
Hello! I'm looking to house hack a property in San Diego. I would like to rent out the extra bedrooms to medium term tenants or via AirBnB to short term tenants (after getting the proper city permit) to maximize the rental income.
For the folks out there in the medium term/short term game in San Diego, how is it going? Any advice for a newbie to this strategy and market? I'm currently looking for properties under $700k so most of them have been 3bd/2ba or 2bd/2ba townhomes/condos in Mission Valley, Clairemont, or East Village.
I have already connected with a great realtor, but looking to get other experienced people's opinions.
Hi @Luis Espinoza,
I have 2 full time STR/MTR's in San Diego - one in Bay Park (this is one unit of a multifamily I own there) and one in Oceanside (large house with a hot tub, etc.)
If you are going the STR route, I will say that bookings are WAY down year over year. I would add to this that, people are either renting your unit to be at your unit, or extremely close to something. If you are renting a house in La Mesa, I don't know that your revenues would be great in this environment, from what I have seen this year.
The MTR route is great if you can purchase near military bases or hospitals here, for military TAD orders or travel nurses.
I have a fantastic property manager for STR's if you would like his contact info - he runs all 7 units that I have on Coronado and about 20 more for clients of mine in San Diego.
I think potentially the most important part of this strategy will be your debt and how you structure it. Do you plan to do a 30 yr conventional? With the roller-coaster in rents from the STR game (for example, my Oceanside place did $20k in July and $1400 in February) I would just want to make sure that you structure a monthly debt bill that is robust enough to ride that wave confidently!
Hope that helps!
Thank you for the input Keegan. It's great to hear actual revenue numbers from investors with properties in the area. I figured there would be some volatility in revenue, but I didn't think that much! Wow 20k vs 1.4k. I will keep this in mind as I continue to search for the right investment.
The best strategy to battle volatility might be to save all additional revenue generated during the peak months to be used as reserves during the slow months. Another option might be to look for medium term tenants during the slow months and short term tenants during the peak months. Since I will be living in the property, it might be more straightfoward to swap strategies based on the market demand.
I'm currently looking to use a 3.5% down FHA loan with a fixed interest rate for 30 years to finance the property. I am specially leaning towards this option due to the recent reduction in PMI rates for FHA loans. My plan is also to ask the seller to finance a 2-1 loan buydown with the intention to refinance in two years if rates have lowered and the property has appreciated to the point where I can get rid of the PMI (fingers crossed). If that's not the case, it's okay, I will continue with FHA loan for as long as needed. I am being careful to ensure the deal makes sense at the closing day interest rate aka assuming there is no 2-1 buydown.
No need for an STR property manager at the moment (thank you for the offer!) as I plan to self-manage but I will keep it in mind in case I ever need one.
Hello! I'm looking to house hack a property in San Diego. I would like to rent out the extra bedrooms to medium term tenants or via AirBnB to short term tenants (after getting the proper city permit) to maximize the rental income.
For the folks out there in the medium term/short term game in San Diego, how is it going? Any advice for a newbie to this strategy and market? I'm currently looking for properties under $700k so most of them have been 3bd/2ba or 2bd/2ba townhomes/condos in Mission Valley, Clairemont, or East Village.
I have already connected with a great realtor, but looking to get other experienced people's opinions.
Hi @Luis Espinoza,
I have 2 full time STR/MTR's in San Diego - one in Bay Park (this is one unit of a multifamily I own there) and one in Oceanside (large house with a hot tub, etc.)
If you are going the STR route, I will say that bookings are WAY down year over year. I would add to this that, people are either renting your unit to be at your unit, or extremely close to something. If you are renting a house in La Mesa, I don't know that your revenues would be great in this environment, from what I have seen this year.
The MTR route is great if you can purchase near military bases or hospitals here, for military TAD orders or travel nurses.
I have a fantastic property manager for STR's if you would like his contact info - he runs all 7 units that I have on Coronado and about 20 more for clients of mine in San Diego.
I think potentially the most important part of this strategy will be your debt and how you structure it. Do you plan to do a 30 yr conventional? With the roller-coaster in rents from the STR game (for example, my Oceanside place did $20k in July and $1400 in February) I would just want to make sure that you structure a monthly debt bill that is robust enough to ride that wave confidently!
Hope that helps!
Thank you for the input Keegan. It's great to hear actual revenue numbers from investors with properties in the area. I figured there would be some volatility in revenue, but I didn't think that much! Wow 20k vs 1.4k. I will keep this in mind as I continue to search for the right investment.
The best strategy to battle volatility might be to save all additional revenue generated during the peak months to be used as reserves during the slow months. Another option might be to look for medium term tenants during the slow months and short term tenants during the peak months. Since I will be living in the property, it might be more straightfoward to swap strategies based on the market demand.
I'm currently looking to use a 3.5% down FHA loan with a fixed interest rate for 30 years to finance the property. I am specially leaning towards this option due to the recent reduction in PMI rates for FHA loans. My plan is also to ask the seller to finance a 2-1 loan buydown with the intention to refinance in two years if rates have lowered and the property has appreciated to the point where I can get rid of the PMI (fingers crossed). If that's not the case, it's okay, I will continue with FHA loan for as long as needed. I am being careful to ensure the deal makes sense at the closing day interest rate aka assuming there is no 2-1 buydown.
No need for an STR property manager at the moment (thank you for the offer!) as I plan to self-manage but I will keep it in mind in case I ever need one.
Hi @Luis Espinoza - Love it! My wife and I self-managed our first 3. She is full time in design/staging for Airbnb's now.
I like the FHA idea for low capital cliff to get in the deal, but that PMI lasts forever (literally, you don't shake it at 78% LTV). So it is good to have an entry, medium term, and long term debt plan: My lending team is great at this. Ie. FHA with 3.5% down immediately, and maybe take a re-finance in 18 months continuing with FHA but buy a property such that I can do some ADU magic and refinance as a conventional duplex in 3-5 years (thus getting out of that PMI and forcing equity).
Feel free to reach out for any guidance - happy to be a resource for you!
Thanks for the encouraging words and thoughtful advice on condos. These are things I had already been asking but I did not know about potential restrictions even while living in the property. Will add it to my list of questions. Also, thank you for the book recommendation!
@Dan H.
@Kenneth Donaghy@Steve Meyers
Thank you both for the SD specific advice. I will be wary of East Village and look into La Mesa. As local investors, do you have a recommendation for a local meetup to attend to meet other investors in the area so I can continue learning?