Successfully house hacking in Bay Area (or similar market) with FHA

10 Replies

I was wondering if anyone has been successful with finding a multi-family home in the Bay Area to 'house hack' that fit the FHA guidelines (recently)? My family would like to move to a nicer area, and thought that using the house hack of buying a multi-unit property to live in one unit and rent the other would be a great way to get some skin in the game. However there doesn't seem to be many properties that will qualify for a FHA loan, those that do are areas that I would not want to live in.

@Peter Maclennan

From what I am finding in terms of duplex/triplex in the fremont/milpitas/san jose areas seem to be all $1M+ where the FHA allows for triplexes up to $967,950 and duplexes up to $800,775 in Santa Clara/Alameda counties. I understand finding a deal is work (and I've been looking) but I was just curious if anyone has recently been able to get an FHA loan for a multi-family unit in the area to live/rent. I am also curious if someone has, what percentage of the mortgage payment are you getting in rent and how long are you planning on living there (will collecting rent on the unit you live in be the tipping point into positive cash flow?)

@David Echeverria - Have you thought of expanding your search location? Everything in the South Bay is really hot right now. A lot of tech millionaires have money to spend on houses and investment properties. If you move a little farther away from the epicenter, you may find something more affordable. Does that sound reasonable?

Originally posted by @Peter Maclennan :

@David Echeverria- Have you thought of expanding your search location? Everything in the South Bay is really hot right now. A lot of tech millionaires have money to spend on houses and investment properties. If you move a little farther away from the epicenter, you may find something more affordable. Does that sound reasonable?

Yes, it does sound reasonable if we were just looking at a straight investment property and not a primary residence. The reason we want to move further south is to be closer to family and we like the schools. We spend most of our weekends driving down to SJ where both my wife's and my parents live (plus it would be nice to have a babysitter closer). Moving south would increase our commutes (I work in SF and my wife in San Mateo), but BART works for me and if we're close to the Dumbo bridge it shouldn't be an issue for my wife. Would it make more sense than to look at a SFH that needs some work and force the equity, if the area is a sticking point?

@David Echeverria ,

Tough to have your cake, and eat it too :(

I purchased a 4plex in the Bay Area with an FHA loan to get into an investment property I lived in with numbers that made a lot of sense. It paid for more than all my expenses and lived for free, with a purchase just over 2 years. To answer your other question, I think the best house-hacking methods here would be the following.. I think all of these are biable in the Bay..

a) renting each room to students
b) airbnb and/or vacation/business traveler short term housing
c) SFH or units with front and back door. Can rent as two almost private spaces w/ shared kitchen

The biggest difference is that I bit the bullet, and moved to an area that was less desirable to make it work, and have an investment that better fit my needs. After more than a year of living there, it turned out that I found a different place that I would rather live. But I don't have a family!

Regarding the limits on the max price for FHA, I can't change that for you. There are some banks doing 5, 10, or 20% down for owner-occupied homes. And some I believe are doing that for 2-4 units. So you may be able to get a non-FHA loan that doesn't have the same limit. Or get a 1st lien at 75-80% with a "piggy-back" second lien from the same lender, so you have less downpayment..

Not sure what other kind of advice you are looking for. Prices are what they are, and FHA limits are what they are.. Good luck though!

Updated over 3 years ago

You want a low-cost place with FHA in SJ area. I want to be rich and beautiful.. But here we are! :)

I too wish there was a simple answer to this question. The San Jose area is a great place to live. I wish it was less expensive and easier to "house hack" here. I guess price comes with the territory. I have resorted to renting a small house for my family here in Los Gatos, CA for the schools. I recently checked out a duplex near my residence listed for 1.3M. 

There are definitely challenges to finding a "nice" place to live that also make sense for house hacking. I would be interested to here from others in the Bay Area that have had success with this strategy. @J. Martin has some good advice. I wish I would have followed his path earlier in my life, pre-family.  I want to have my cake and eat it too...guilty. 

As someone who is buying and selling in the south bay right now ( we looked into multi family homes) anything nice or in nice ares is 1 million plus. Also unless its a property that turns away the masses, area, lots of TLC, ect its got to be hard putting in an offer with FHA vs all the cash buyers.

So far in 2 months we have put in 7 offers on SFH and 1 Multi Family home and 7/8 we got beat out on were cash offers.

Good Luck out there!

thanks for the replies everyone.  I was just curious. The reason we are looking with fha loan isn't because of the down payment, based on recent comps we have over 100k of equity in our townhouse/condo, but rather because we had a foreosure even though our credit scores are between700-750+ (It's a long complicated story but we wish we had know about investors who could of helped save our credit then).  Fha is our only option in terms of financing for at least another 4 years and it needs to be our primary residence.

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