Best Place to House Hack for Software Engineer?

[Kamil Kisielewicz]

Hi All,

I'd like to start by saying thank you to anyone taking the time to read this post and reply! This is my first post on BiggerPockets. I've been reading financial books on real estate and stock investing. I just finished reading Set For Life, and I'm extremely inspired to take control of my financial future. I'm currently going to be interning at Amazon and NVIDIA during the second half of 2021 in Software Engineering.

Looking further ahead, since I'll be making around 150k before taxes, I want to make sure that 15-20k doesn't get eaten so I can reduce rent expenses. However, the Bay Area, where I currently live, has crazy high house prices. 

Therefore, I'm looking into Seattle, Austin, and Raleigh-Durham to move into after college and house-hack. These markets also seem to be pretty tough to pull off a house hack in, but the midwest properties (which seem to be more house-hack friendly) don't have tech hubs that are nearly as booming.

Which city should I be looking into as a new grad in Software Engineering to start my real estate journey?

[Daniela Andreevska]

Hi, @Kamil Kisielewicz!

Now is a really great time to house hack as a software engineer. I assume that with your profession you can work remotely, which means that you should go after the most profitable (and affordable) market for real estate investing. For the cities which you've listed, I would recommend that you look into Raleigh-Durham. The PwC and Urban Land Institute 2021 Emerging Trends in Real Estate: US and Canada report (which is a very prestigious and trusted publication in the real estate investing industry) ranked Raleigh-Durham as the #1 market for overall real estate perspectives in the coming year.

Our analysis of the most recent data shows that property prices are relatively affordable in Raleigh with a median value of $447k. Affordability is an important factor for someone who is just getting started in real estate, like you. Moreover, according to our data, the average cap rate for traditional properties in Raleigh is 2.2%. I know that this doesn't like a lot, but when compared to nationwide city averages and the average values in other top markets for long-term rental properties, it is actually one of the highest values across the nation. This is just an average city-level metric which indicates that Raleigh overall is a great place to invest in real estate at the moment. Of course, when choosing a specific property, you have to conduct detailed investment property analysis to optimize your return while staying within your budget.

If you are open to other locations, I can make a few suggestions as we've recently looked at the best locations for investing in small multifamily properties which is what you will be looking at for house hacking. Some top markets for buying a duplex or trplex to rent out on a long term basis at the moment include: Manchester, NJ; Napes, FL; Cincinnati, OH; Fort Wayne, IN; Detroit, MI; Baltimore, MD; Cleveland, OH, Syracuse, NY; Akron, OH; and Rochester, NY. These are the locations which offer the highest return for small multifamily properties.

Please feel free to ask any questions you might have about these markets or anything else.

Good luck with your first investment!