House hacking in San Diego

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House hacking in San Diego

Maddy C.
Brooklyn, NY · Member since 2020 · 13 posts · 2 votes

Considering the move to SD in September/October this year and want to purchase a house hack. Will be heading out there in March to check out neighborhoods and get a sense of the area. Would likely be working in the University City area.

Budget probably max $700k with FHA. It would just be me and I'm open to renting out rooms / parking spaces / mid-term rentals / living in a run-down ADU - honestly anything. And it has to make sense as a rental once I move out. I've seen a lot of posts on BP from even 12 months ago, and it seems that prices have increased since then.

I'd love to purchase a muti-family (using the future rental income to qualify for a larger loan) however they seem unattainable now with the prices. 

  • Are there any other ways to reduce cash on close - maybe first home buyer programs, rolling closing costs into the loan etc?
  • What strategies are you seeing that work for lower entry points?
  • What neighborhoods do you think I should check out while I'm there?
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Emy Bernardo
Investor · San Diego, CA · Member since 2017 · 112 posts · 92 votes
4y

Hi Maddy - sounds like you have a good mindset for investing and this is the best way to start out as a first time buyer! There are some great first time buyer programs unique to California and depending your income, you may even qualify for a ADU grant. https://www.calhfa.ca.gov/home... I live next to University City and it's a great area near UCSD that would be ideal for renting rooms, but the median price is 1.3 million for single family and not an area that has many duplexes. I often see duplexes for sale in my neighborhood (Clairemont/Bay Ho -92117) but they usually sell for at least 900k or more. If you like this area - you could look at a condo. For a SFH, go a little further east - say La Mesa, Santee, Lakeside, where the price point for single family is lower. You may be able to find a little fixer with a detached garage that could be a converted to an ADU.

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  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Maddy C.

    Try to pick @Dan H. 's brain if you can. If making sense = positive cash flow then you are probably out of luck. If making sense = appreciation greater than negative cash flow, you probably have a realistic expectation.

    0Reply
  • Maddy C.
    OP
    Brooklyn, NY · Member since 2020 · 13 posts · 2 votes
    4y

    @Todd Rasmussen thanks for the response! I just want to reduce my cost of living as much as possible. I don’t expect to cash flow while HH, but would love to pay no more than ~$1k/month. I’d live in a 5 bed house, turn the living room into a bedroom, Airbnb spaces... I’m comfortable with it all.

    0Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    4y
    Originally posted by @Maddy C.:

    @Todd Rasmussen thanks for the response! I just want to reduce my cost of living as much as possible. I don’t expect to cash flow while HH, but would love to pay no more than ~$1k/month. I’d live in a 5 bed house, turn the living room into a bedroom, Airbnb spaces... I’m comfortable with it all. 

    It's a great strategy, I have a friend who's net positive on a property he's lived in and rented rooms since he bought it. Good luck!

    0Reply
  • Emy Bernardo
    Investor · San Diego, CA · Member since 2017 · 112 posts · 92 votes
    4y

    Hi Maddy - sounds like you have a good mindset for investing and this is the best way to start out as a first time buyer! There are some great first time buyer programs unique to California and depending your income, you may even qualify for a ADU grant. https://www.calhfa.ca.gov/home... I live next to University City and it's a great area near UCSD that would be ideal for renting rooms, but the median price is 1.3 million for single family and not an area that has many duplexes. I often see duplexes for sale in my neighborhood (Clairemont/Bay Ho -92117) but they usually sell for at least 900k or more. If you like this area - you could look at a condo. For a SFH, go a little further east - say La Mesa, Santee, Lakeside, where the price point for single family is lower. You may be able to find a little fixer with a detached garage that could be a converted to an ADU.

    2Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    4y
    Originally posted by @Maddy C.:

    Considering the move to SD in September/October this year and want to purchase a house hack. Will be heading out there in March to check out neighborhoods and get a sense of the area. Would likely be working in the University City area.

    Budget probably max $700k with FHA. It would just be me and I'm open to renting out rooms / parking spaces / mid-term rentals / living in a run-down ADU - honestly anything. And it has to make sense as a rental once I move out. I've seen a lot of posts on BP from even 12 months ago, and it seems that prices have increased since then.

    I'd love to purchase a muti-family (using the future rental income to qualify for a larger loan) however they seem unattainable now with the prices. 

    • Are there any other ways to reduce cash on close - maybe first home buyer programs, rolling closing costs into the loan etc?
    • What strategies are you seeing that work for lower entry points?
    • What neighborhoods do you think I should check out while I'm there?

     Your plan is not bad but the limitation is that the rent from renting rooms does not help your loan qualification.  Rent from a 2nd unit of a duplex does help your loan qualifications.  Therefore, you can finance more purchasing a duplex.  You can then further house hack the unit you will live in by renting the rooms (this addition HH will not help with the loan).

    Find yourself an investor RE agent. If they do not own at least 3 local properties (2 investment properties plus their OO property), keep looking.
    FHA will count income from duplex, but triplex and quad have sustainability requirements that would be a unicorn find in San Diego.

    Good luck 

    0Reply
  • Mark Frattini
    Real Estate Agent · San Diego, CA · Member since 2014 · 338 posts · 176 votes
    4y

    @Maddy C.

    Depending on your comfort level for commute time, neighborhood preferences etc. you should be able to find something that works for under $700k. There are a lot of different down-payment assistant options for first time homebuyers. Make sure you work with a lender who is familiar with the different programs that are available.

    0Reply
  • Maddy C.
    OP
    Brooklyn, NY · Member since 2020 · 13 posts · 2 votes
    4y
    Originally posted by @Mark Frattini:

    @Maddy C.

    Depending on your comfort level for commute time, neighborhood preferences etc. you should be able to find something that works for under $700k. There are a lot of different down-payment assistant options for first time homebuyers. Make sure you work with a lender who is familiar with the different programs that are available.

    Thank you Mark. Are there any lenders that you would recommend?

    0Reply
  • Adam Christopher Zaleski
    Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes
    4y
    Originally posted by @Maddy C.:

    @Todd Rasmussen thanks for the response! I just want to reduce my cost of living as much as possible. I don’t expect to cash flow while HH, but would love to pay no more than ~$1k/month. I’d live in a 5 bed house, turn the living room into a bedroom, Airbnb spaces... I’m comfortable with it all.

    If you are willing to buy a 5 bedroom and rent out 4 rooms you should be able to get close to break even. However, your max is 700K based on what others have said the median house price is 1.3 million for that area. A 5 bedroom will probably be 1.6 million. You can probably still do it, but you are going to have to drive farther away from the ocean to a less desirable area to get to your 700K number. 

    I lived in San Diego from 1998 to 2005. I ended up moving because I wanted to buy a house and do a house hack for graduate school and the price point of San Diego was too expensive. 

    In 2007, I ended up buying a 4 bed/2 bath in Fort Collins, CO for 182K that needed 10K worth of work. I put down 20%, so I was all-in for around 50K. My PITI was $950 and I rented 3 rooms at $350/month. I was cash flow positive $100/month.

    You don't need 20% down for a primary. You can do 3% to 5%. I would make sure that you have plenty of cash reserves in case anything breaks. After all repairs are done, I wouldn't want less than 25K in my checking account for emergencies. 

    0Reply
  • Robert Comstock
    Member since 2018 · 138 posts · 56 votes
    4y

    Look in 92117 for multi's (easy access to UTC). They run about 800 - 1m for (2-1(or 1-1)/2-1) duplexes. These units are going for that price as owners are just starting to drop ADUs on the back portion of these lots (Value Add). You can actually add up to 4 ADU on the multi lots (note if you add 4, then 2 have to be lower income). If you want to add those ADUs I recommend making sure your lot has alley access. In general the current tenants in this area are paying are way under market, and you have rent control to deal with; so you may need to have a strategy to get your rents up.

    @Maxwell Ventura got me one of these in November so I recommend you talk to him about what's current.

    2Reply
  • Account Closed
    Member since 2022 · 55 posts · 19 votes
    4y

    Hey there - I’m looking to do the same. Feel free to message me if you’d like to chat about SD house hacking. :-)

    0Reply
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