New Grad Considering House Hacking in San Diego

5 Replies | San Diego, California

Hi all! I've been spending the last few weeks reading a lot more about investment properties and learning about the world of real estate. I've spent a lot of time on the forums here and listening to the BP podcast. I really like the possibilities that real estate investment opens up, of course, but I was hoping to get spark a little discussion on the San Diego market in particular. I recently graduated from college and began working full time here in San Diego, and I can see myself staying here for a while. 

From what I've read so far, it seems that some form of house hacking would be the best first step for me. I've been looking at 2-3br apartments, condos, and townhomes in the Mira Mesa/Sorrento Valley/La Jolla university area where I could have renters living with me in the other bedrooms. However, it kind of seems that the market is just not in my favor right now. I'm finding it difficult to find places where monthly rent for the property covers the mortgage, much less any maintenance and fees or cash flow. Obviously San Diego is really competitive, but is this just the wrong strategy for this area? Am I out of luck in San Diego given my newbie status, or do I just need to stick with it to find the right deal? I spoke with a local agency and they believe it's still a viable situation given where interest rates are right now and that the market is back to "neutral" from the strong seller's market, but I don't know if I'm just better off investing outside of San Diego to gain benefits from REI.

I'd love to hear your thoughts! 

@Account Closed You're looking for houses that will cash flow in San Diego with I'm assuming a low down payment after 10 years of wild appreciation in one of the most desirable places to live in America...

Your head is in the right place, but maybe we need to temper expectations first.  As an example, let's say your options to rent are going to cost you around $1,000 a month for a room and another $200 a month for any various utilities.

If you "house hack" and get your living expenses down to $200 a month total, you will be saving $1,000 a month.  $12k a year cash.  That's a huge return.  Sure you aren't technically cash flowing, but your finances are in a much better position than renting.

Me personally: what I would do is find a 5 bed house in a nice area where the seller is willing to do some sort of seller financing.  Furnish the rooms and then rent by the room.  $750 a room total gets you to $3k a month cash.  That would probably cash flow or break even at the worst.  I have a house hack in Vegas that cash flows around $1,200-$1,400 a month after all my living expenses are covered.  It's a great way to get started in this game.

@Spencer Cornelia Thanks for the thoughtful response! I think that's kind of the hunch I was getting; a big success for me would be living for $200 a month rather than cash flowing thousands right off the bat in this market. 

As I mentioned, a traditional mortgage loan won't qualify me for much given my income, so would a seller financed deal be the ideal possibility? Something where I become responsible for the managing rent and tenants but basically provide a monthly check to the seller, like you mentioned.

I'm thinking it might be more important then to focus on networking in the area first to get to know more people working real estate in San Diego so that I'm not just hoping for a deal to fall into my lap. I was looking at real estate meetups in the area: is that the best way to get my feet wet with trying to contribute something to this community and network?

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Hi Adrian, 

I currently helping people successfully house-hack in SD. I'm looking forward to reading the new book on the topic BP just released. As you mentioned in your PM. You have seen my post and comments on related topics, therefore I assume you've read why I like MIra Mesa. We have a 2300sqft 4bed/3bath in West MM, that has has a family room and living room. I know the same floor plan where the rooms are all rented from $1000-$1500/mo plus the family room has been converted to another rental space. As well SD, people are more likely to utilize outdoor space for more chill space, making tight living more comfortable. 

I will be happy to discuss other neighborhoods for successful house-hacking, yet thought I would give you an example of MM since you mentioned it. 

As far as creative financing, that is also possible. discovering and focusing on which strategies works best for you, then taking steps achieve your goals, you are on your way brother, Cheers!

depending on your tolerance for pain....if your near the university you can also share a room in your own house or convert unused space into a extra bedroom for yourself....if you don't mind living like/with a student.

for instance the owner of my place (UTC), before I bought it, converted the formal dining room into a bedroom so the owner could rent it out as a four bedroom instead of a three.

@Account Closed I was in your shoes a couple of years ago so I know how difficult this sounds, but your best plan of attack if you were after a great cash flow house hack would be to buy a distressed house in need of work, take over the payments from the owner, rehab with cash and credit card (or borrow from parents/friends), and then rent by the room.

I spent about 15-18 months learning and networking before I purchased my first property.  I recommend it to every person entering this game.  Spend every chance you can listening to podcasts and all the free time you can meeting up with local investors.

I personally think every beginner should be aiming for seller financed deals because that may be their only option and it's a really valuable strategy to learn as it's significantly easier to buy properties when you don't have to play by the banks' rules.  I recently made a YouTube video about how I purchased my 4plex using seller financing.  My channel name is my full name.  Don't feel obligated to watch but it may be helpful.

If I were you, I'd start today by finding every local investor meetup you can and going whenever they meet.  Use the search bar and find local investors on here and message them too.