San Diego Market. Duplex, triplex or 4plex suggestions?

15 Replies

First time home buyer trying to house hack in San Diego. My lender has mentioned I can't do FHA for triplex or 4plex and need to put a minimum 15% down. Is this the case? I am looking at FHA for duplexes but a lot reach jumbo limits and the ones that don't I am still looking at a minimum all in mortgage payment of 2,500. Any ideas on how to get started house hacking in San Diego? Any financing suggestions? Any fix up financing suggestions? Thanks!

@Adam Regos for fha yes only duplexes would work. If you go conventional then you have 15% option for 2 unit but usually goes up to 25% down for 3-4 unit. You can usually find decent duplex’s in the 600k-800k range depending on area. I have a duplex in contract right now with client using fha to do 3.5% down.

@Adam Regos

Agreed w/ Twana. Best bet is to go FHA 3.5% down owner occupied on a duplex. You can find something decent between $600-700K+ throughout the majority of metro SD and beyond.

It's one of the best ways to start or build onto your portfolio. You should experience great returns on your money here w/ SD's growing & resilient economy & low supply / high demand. 


@Adam Regos  you're getting good advise, you just need help with realistic expectations of what's possible within your budget, and the location you would like to live. Aligning your big vision with what's possibility in moment. You're taking the steps necessary to take giant leaps soon. 

Are the FHA loan limits too small for San Diego? Just wondering why you can't do 4 units in San Diego.

@Stephanie P.

The FHA wants to know that a multi-unit property is self-sufficient. In other words, the total rent that you receive for the units must be equal to or greater than the mortgage payment. This means the total mortgage payment, which includes principal, interest, real estate taxes, and insurance.

Originally posted by @Maxwell Ventura :

@Stephanie P.

The FHA wants to know that a multi-unit property is self-sufficient. In other words, the total rent that you receive for the units must be equal to or greater than the mortgage payment. This means the total mortgage payment, which includes principal, interest, real estate taxes, and insurance.

I do believe there is a factor on that.  75%?  The factor amount is irrelevant if the properties cannot meet the requirement.  

I do believe that I will be under contract today for one that could meet the self-sufficient requirement, but it has other items that would eliminate it as a FHA candidate.

I recommend you start with a detached duplex. Our detached duplexes look like they are two SFH except for there is a single water meter that feeds both units.

This is one of our detached units.  This unit is one unit of a triplex.

I love the detached small multiplexes. Tenants stay forever. Very few complaints about the other tenants. Better cash flow than SFH, but similar advantages.

Good luck

@Twana Rasoul at that range let's just say a 700K duplex how long would I have to live in it before I could build enough equity to cash out refi and acquire another property? My lender says 80% LTV which seems like it could take a while only putting 3.5% down. Not to mention my mortgage payment would probably be around 2,500+ a month. Should I buy a fixer upper to build equity quicker? What's your experience in the San Diego market? Move every 2 years to rinse and repeat? Cash flow seems near impossible when I run #'s in SD. Thanks for your time.

you don't have to refinance to move out.  You are committing to occupying the property for a year.  Then you can move on to the next property.

#repost @Adam Regos Would you wait to see what happens with Covid and foreclosures?

What did Warren Buffet say? "I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."

Read this closely: The likelihood of us having another foreclosure crisis is about 0% percent.

There seems to be some concern that the 2020 economic downturn will lead to another foreclosure crisis like the one we experienced after the housing crash a little over a decade ago. However, there are quite a few major differences this time. 

1) A robust forbearance program - And the concern is what happens after forbearance? The banks and the government learned from the challenges the country experienced during the housing crash. They don’t want a surge of foreclosures again. For that reason, they’ve put in place alternative ways homeowners can pay back the money owed over an extended period of time.

Furthermore, the Mortgage Bankers Association released last week - 'The share of Fannie Mae and Freddie Mac loans in forbearance dropped for the 24th week in a row to 3.35%" 

Of the cumulative forbearance exits for the period from June 1 through November 15, 2020:

  • 30.5% represented borrowers who continued to make their monthly payments during their forbearance period.
  • 24.0% resulted in a loan deferral/partial claim.
  • 16.8% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
  • 12.9% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
  • 7.1% resulted in loans paid off through either a refinance or by selling the home.
  • 6.8% resulted in a loan modification.
  • The remaining 1.9% resulted in repayment plans, short sales, deed-in-lieus or other reasons.

Nearly two-thirds of borrowers who exited forbearance remained current on their payments, repaid their forborne payments, or moved into a payment deferral plan. All of these borrowers have been able to resume – or continue – their pre-pandemic monthly payments.”

2) Equity - The Mortgage Monitor report from Black Knight indicates that of all active forbearances which are past due on their mortgage payment, 77% have at least 20% equity in their homes.

The high level of equity provides options for homeowners, policymakers, mortgage investors and servicers in helping to avoid downstream foreclosure activity and default-related losses.

3) Supply & Demand - One of the strongest indicators of any market, RE or not. Our active inventory is approximately 40% less than it was last year. Currently at 1.4 months of inventory county wide. DET homes under 2000 sq ft are at .8 months of inventory. We're in a heavy sellers market. With so much demand for houses there is no need to "firesale" someone's house if they can't make a payment. These people who enter into pre-forclosure are already getting bombarded by mailers, callers, emails, txts, from wholesalers and investors.

Hope this helps.

I am looking for a multifamily and found this one the other day looks good on the inside but the outside is a little bit worn down, the price is $699,000, what should I focus on when planning to use this for house hacking in one of the units and rent the other.


@Adam Regos   I see what you mean, and have wondered the same thing - How to refinance the 1st duplex after 1 or 2 years to then help pay for the next duplex?  Value-add then raise rents?  And would the refinance then increase the first mortgage too high with the current rents?  I think this strategy might work better on lower cost properties.

Or don't refi, just use the same house hack method for the 2nd duplex?

Also, if the first duplex is negative or cash flow neutral for a couple years, will it be difficult to get a 2nd loan to purchase another duplex because of the debt to income ratio?  

Thank you to everyone's input!  It's helping to develop a strategy here.

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