What should I do?

Question

Hi all,

I'm a software engineer living in San Diego and I was recently laid off. I've got $150k in cash and trying to find a new job while I continue to pay rent and watch my cash burn.

I've had the real estate itch for years and have just never had the guts to start. I'm willing to invest out of state. I'm just looking for some connections and maybe some advice or opinions on what you might do. Anything is welcome.

Thanks,

Jack

Jimmy Lieu · Answer

Hi Jack, I'd recommend that you look into Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!

Kerlous Tadres · Answer

@Jack Grossmann, I would recommend using the skills that you have already and start shopping around and see what better job you can land and/or what area you would like to live in with not as high of cost of living as San Diego. As for investments, I would recommend looking into Columbus, Ohio there is a great market to pick up rental properties because of the lower home prices and demand from renters. JPMorgan Chase, Nationwide, Honda, L Brands, Huntington, and Amazon are just a few of the many companies that have thousands of jobs in the city.New Albany is home to several major data centers including ones operated by Amazon, Google and Facebook, whose parent company, Meta, announced plans in the spring to expand its New Albany campus.

Dan H. · Answer

Software engineer in San Diego should have little issues finding employment.  My ex-employer in recent years stock piled SW engineers for future work that we did not even have yet.

Financing is easier with better terms when employed which I suspect will not take long for you to find employment.  I therefore would wait until you are employed before jumping into RE.

The path I recommend for you is to house hack (rent out one unit, consider renting out rooms in your unit) a detached 2 unit property (either duplex or SFH with ADU).  The second unit’s rent helps your income which is already high as a SW engineer.  Duplexes can qualify for FHA high LTV funding in San Diego (triplex and quad cannot).  You can get a real high LTV when owner occupancy (especially if using FHA loan) so $150k can go far on the down/closing and your SW engineer salary and percentage of the rent from the second unit should allow you to qualify for a large loan.

At high LTV, if you do not rent out rooms in your unit, the cost of this house hack the first year likely will be more than renting, but by the 2nd year you likely will be similar to renting, and by the 3rd year you likely will be better off on your expenses and probably have accumulated a significant amount of equity via appreciation and principle pay down.

By the way I was a SW engineer in San Diego (a JSF architect), that house hacked my first house (but it was a SFH, not 2 units).  That start allowed me to keep scaling, retire early, and mostly do whatever I desire.

Good luck

Sam McCormack · Answer

@Jack Grossmann

I would recommend buying OOS, but I think it would be better to pursue a househack in your area. It sounds like you need to do that more than anything else. Seeing as you are paying rent already, may as well pay for something you will own

Jaron Walling · Answer

@Jack Grossmann It's smart to have a massive emergency fund. I take that statement seriously because there's people living paycheck to paycheck stacking auto loans, students loans, credit cards, etc. with nothing in savings. I'm friends with a guy that quit a stable engineering job making $100k per year to pursue something new. He sold a bunch of toys and got focused on "the next job". He was bored and mentally exhausted. He has savings, confidence, and now a RE license. He jumped off the boat and started treading water.

Find another job. Without stable income you can't jump into REI. That's the hard truth. Lenders are strict on loan requirements.  It's an uphill battle not worth the fight.

Paying rent is a stop gap. It's freedom to do what you want, when you want, and where you want. If you owned rentals, a primary residence, or a combination you're NOT moving or looking for opportunities else where. You can't just drop everything and relocate. Managing properties requires sacrifice. It requires TIME which you have lots of right now. If you want to invest OOS start looking for jobs there. Start building your campsite before you pack your gear. Start networking with boots on the ground and don't waste time with anything else.

Jake Andronico · Answer

@Jack Grossmann

Congratulations on having so much cash. As a SW, hopefully you won't have much of an issue getting a new job.

If it's remote, you are in an extremely strong position. House hacking is always what I recommend starting out, but I am of course bias.

I have house hacked two properties in four years and it's already changed my life. They both cash flow approx. $800-1K per month each and have appreciated approx $150K each in value.

Happy to chat and provide an insight I can. Feel free to reach out.

Robert Ellis · Answer

Hey there! Sorry to hear about the layoff. Real estate can be a great path, especially with your savings. Out-of-state investing is a solid option. Let's connect and explore strategies that align with your goals.

Kenneth Donaghy · Answer

@Jack Grossmann, I agree with the other San Diego locals. Focus 1st on getting a new job, Software engineering is a good paying career. Then look for a househack opportunity here locally. If you don't have too much of a lapse in employment you will be able to secure a loan relatively easy.

Amir Khan · Answer

@Jack Grossmann Honestly, if I was a software engineer, I would not be too worried. You'll probably find a better job/opportunity soon. Meanwhile, if you are interested in earning high returns on your cash collateralized by SFHs in midwest, DM me for details.

Twana Rasoul · Answer

@Jack Grossmann first thing would be to get another job as quickly as possible and then purchase a duplex or house with ADU in San Diego to live in one and rent the other.  I don't recommend going long distance for an initial purchase unless you know the market and have people you trust in that market outside of Realtors and Property Managers.

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