Bay Area rookie seeking house-hack guidance

[Parker Ludlow Imrie]

My wife and I live and work in the San Francisco Bay Area, have roots here, and plan to stay. (Great place for a rookie to cut his REI teeth, right?) We are about to sell our SFH (not a profitable rental), which should give us a decent chunk of cash to start with. In the meantime we're renting in Alameda--we intend this to be temporary, though the area is pretty ideal for us long-term. We've been looking at MFH house-hack options, which seems the most straightforward, but haven't ruled out other options. I don't expect to break even in this market--I'm okay with dramatically reducing net cost of living from our SFH PITI, allowing us to save more for the next investment, but I am also concerned about rent control and other local gotchas.

What should I know about Bay Area rent control? What other gotchas should I educate myself on? Are there other options worth looking into as a newbie? (Self-storage seems attractive too, or simply remote investing, but don't know if those are worth continuing to pay rent ourselves). Is STR house-hack a better bet for cash-flow?

Trying to avoid analysis paralysis but there are so many options and variables; I'm looking for some guidance.  Thanks in advance for any words of wisdom!

[Parker Ludlow Imrie]

Originally posted by @Ronald Allen Barney:

I'm not in the Bay Area but it wouldn't make sense to me that they would target only MFH for rent control and not include SFH. I think that would be a wash.

The latest round of eviction moratorium has been a political weapon targeting only those areas that weren't as obedient on the Covid Commandments down from On High, which I think in the Bay Area every time Fauci reads tea leaves that instantly becomes public policy.  That should mean at least not having to be blocked from evicting bad tenants.

Specifically with house hacking the two biggest challenges tend to be finding one (as they are highly in demand these days as a lifestyle fad), and the second challenge being funding one when you find it.  It sounds like you have a cash position that makes the second challenge not a problem, so if you do manage to find one I'd say vet it with investor math and then if it passes (no as a measure of how much it reduces the mortgage but the cash on cash return if you were to rent out the whole building, pretending you are just another renter in the math), I'd say jump on it.

Thanks for the insight!

To clarify, our interest in MFH over SFH has nothing to do with rent control, just the increased revenue potential and not having to share living space. The sale of our current SFH is because the rental math for it sucks, while the appreciation has been great.

I don't expect funding to be a show-stopper, though the competition here can be ridiculous, and we're still waiting to see exactly what pre-approval we get and what we walk away with from the sale. As for finding--there are actually a lot of MFH and convertible SFH on the market in Alameda right now, though the numbers I've run so far are never great. Hoping to find something a little better with the help of an agent and/or off-market searching. I like your notion of analyzing with ourselves as renters too; that makes everything more apples-to-apples.

Any insight on STR versus long-term? My understanding is that it's greater cash-flow potential, in exchange for higher management costs (which a house-hack situation would somewhat mitigate) and more volatility.

Thanks again.