Rental Property Investor · Boston, MA · Member since 2017 · 13 posts · 0 votes
Hello all! Newbie here still studying and hoping to get started in REI when I move to SoCal in Jan 2018. I'm mainly looking into house hacking when I get there to get some cashflow before I start getting into rentals and other areas of REI. Is this a good way to start in or would wholesale be the way to go? Also, is there a legal way to practice wholesale in CA without a license? Thanks!
is a great connection to make. He is an agent in San Diego that I work with. He can advise you on house hacking and answer any questions that you have on the market.
is a great connection to make. He is an agent in San Diego that I work with. He can advise you on house hacking and answer any questions that you have on the market.
Very low inventory in SD right now. Expect multiple offer and bidding wars if you are looking on MLS. I specialize more in North County...I feel there are lots more family opportunities.
@Sean C. I recommend everyone start self managed local. I realize the cash flow is difficult in San Diego but what you need to learn is best done local and by managing the unit yourself. My family has 16 units in San Diego and only 2 STR are not self managed (we also still own one out of state unit that is not self managed).
Going out of state can be tempting but there are a lot of potential gotchas. My family tried out of state and our gotchas were quite unexpected and one could think we got unlucky but I believe most luck (in both directions) can be controlled with proper knowledge.
So educate yourself but sitting on the sidelines will not get you started.
If I were starting out I would start house hacking a detached duplex somewhere that you are willing to live.
It sure does seem like that. Hard to say for sure what will happen. The people I speak with point to how difficult it is to get permits and get building approved in San Diego, so until construction regulations loosen up I think its fair to expect inventory to stay low.
Househacking in CA is hard to come by and its better to just rent out a place here and then buy a rental property out out of state. You'll get more bang for your buck and with the same amount of cash you can cover your rent and make some extra cash.
San Diego is the blue chip of real estate. Everyone loves the California coastal cities! It is very hard to purchase currently but will be one of the best investments you could make if you hold onto it for 27 years. House hacking sounds like your most likely option. I agree with @Dan H. multi family house hack and ask yourself were you want to live and make it happen there! Not much real estate makes sense here unless you have larger down payments or are very creative and are ready for a long term play after living in it. We have flip opportunities but you have to be willing to put in a crazy amount of full time work to find them. Keep reading books and educating yourself and always follow your gut. Best of luck!
@Sean C. Welcome Sean! I would start researching and monitoring the market of the area you are moving to every day. This will get you ready for deals when you arrive and have a good knowledge of the "local" market. Therefore you will make well informed decision. All this can be done for FREE (except your time). Monitor how fast homes sell, for what price over asking, what price they are sold for after flip completed and multi family/house hack opportunities. You will be amazed at what you can learn pretty fast. I would also get in touch with a realtor @Brian Murkland has posted on your thread as has @Account Closed. Good luck and keep us posted.
Thanks for the advice everyone! I'll definitely start studying up on the nearby market. @Antoine Martel, do you think it'd be best for investing in a turnkey out of state or just do it myself? I've read that a lot of newbies like myself start with turnkeys since it doesn't require as much managing and you don't really have to do rehab.
If I knew then what I know now that would have been my first step for sure. Multi-family hack every year, then move to another one each year and bam there you go.
If I knew then what I know now that would have been my first step for sure. Multi-family hack every year, then move to another one each year and bam there you go.
Hah Garrett - you know how we've been chatting in the messenger? Well, you might be surprised to know that my family and I are house hacking. But, it's a bit of a different kind of house hack. We are Luxury House Hacking.
To achieve your goals I think my house hacking techniques would go a long way for you and your family :)
@Ben Leybovich -I'd love to learn that strategy!!! We currently have a primary home paid off (value $360k) as well as our one tri-plex apartment building . Teach me!!! My only concern is I really love having my home base as being the one place with NO leverage. But that is my emotions talking right. :-) Family is everything
If I knew then what I know now that would have been my first step for sure. Multi-family hack every year, then move to another one each year and bam there you go.
Hah Garrett - you know how we've been chatting in the messenger? Well, you might be surprised to know that my family and I are house hacking. But, it's a bit of a different kind of house hack. We are Luxury House Hacking.
To achieve your goals I think my house hacking techniques would go a long way for you and your family :
@Ben Leybovich it's next on my reading list. Also, looking for a local house hack @Sean C. and have been networking and learning as much as possible while figuring out the market. Definitely not easy but I figure if I can find a way to make it work out here, with these market conditions, then I will have a foundation of skill sets to use elsewhere, if needed. Happy hunting!
@Ben Leybovich it's next on my reading list. Also, looking for a local house hack @Sean C. and have been networking and learning as much as possible while figuring out the market. Definitely not easy but I figure if I can find a way to make it work out here, with these market conditions, then I will have a foundation of skill sets to use elsewhere, if needed. Happy hunting!
And by then the Audible might be ready. They are taking their sweet time with the review :(
You might also look at the Inland Empire for multifamily house hacking especially downtown Riverside. There are some older multifamily properties there, and the area is improving rapidly.
@Ben Leybovich The luxury strategy does work. I did it in a similar way in a prior living arrangement and it can be pretty awesome. Question would be the best way to offset the two biggest risks. First is a change in policy at the local level either "outlawing" these rentals, making them > 30 days, or taxing through the roof. Second (easier to avoid) would be the increased competitiveness and drop in price due to continued upticks of supply in the area. Not a big risk if you're a beach house or in a less touristy town but I've seen supply shoot up fast in even the best of neighborhoods. Cool strategy.
@Ben Leybovich The luxury strategy does work. I did it in a similar way in a prior living arrangement and it can be pretty awesome. Question would be the best way to offset the two biggest risks. First is a change in policy at the local level either "outlawing" these rentals, making them > 30 days, or taxing through the roof. Second (easier to avoid) would be the increased competitiveness and drop in price due to continued upticks of supply in the area. Not a big risk if you're a beach house or in a less touristy town but I've seen supply shoot up fast in even the best of neighborhoods. Cool strategy.
1. Taxation and further regs are coming - we should all expect it. The money is good, so paying more taxes should not shut down the strategy. Expect it.
2. I would work with 30-day, if it came to it. Or sell the house and move someplace that allows things.
3. If they outlaw AirBnB then there is no difference between US and Venezuela, in which case we got bigger issues :) In some locals this is already the case...don't want to live there, and won't buy there.
4. The thing is, most of the supply is investors. They have dedicated rentals which come with a lot of overhead. House hack represents a huge advantage in this respect. I'll always be able to compete. I am not crazy in love with the AirBnB model as a stand-alone. But, in a Luxury House Hack it's brilliant.
@Ben Leybovich The luxury strategy does work. I did it in a similar way in a prior living arrangement and it can be pretty awesome. Question would be the best way to offset the two biggest risks. First is a change in policy at the local level either "outlawing" these rentals, making them > 30 days, or taxing through the roof. Second (easier to avoid) would be the increased competitiveness and drop in price due to continued upticks of supply in the area. Not a big risk if you're a beach house or in a less touristy town but I've seen supply shoot up fast in even the best of neighborhoods. Cool strategy.
1. Taxation and further regs are coming - we should all expect it. The money is good, so paying more taxes should not shut down the strategy. Expect it.
2. I would work with 30-day, if it came to it. Or sell the house and move someplace that allows things.
3. If they outlaw AirBnB then there is no difference between US and Venezuela, in which case we got bigger issues :) In some locals this is already the case...don't want to live there, and won't buy there.
4. The thing is, most of the supply is investors. They have dedicated rentals which come with a lot of overhead. House hack represents a huge advantage in this respect. I'll always be able to compete. I am not crazy in love with the AirBnB model as a stand-alone. But, in a Luxury House Hack it's brilliant.
Thoughts, Scott?
All for it Ben, especially for hosts on-site, good points particularly #1. It's just a matter of staying ahead of the regulations/taxes and building those into the numbers and overall plan. There's no practical way to outlaw at this point, (although they're still trying in some cities in Europe) and you just have to build those occupancy taxes for the market (or potential taxes if not already in force) and any potential business license reg. costs if any, which is low cost/no cost in most cities.