Leaving San Francisco for a House Hack in Sacramento's Midtown

[Zach Thomas]

My wife and I currently live in San Francisco in Alamo Square. We both work solid jobs (her in tech, me in engineering) and are currently renting a 1 bedroom apartment in a nice area of the city. We have been saving up for a down payment for the last 2 years. At the beginning of this year I transitioned from a design focused job to one with the potential to switch over to a commissioned technical sales role. I am currently still on a salary and recently learned that you need 2 years of documented earnings once you switch from normal W2 salary to commissioned based compensation. At this point our choices are wait 2-4 years (takes time to build up commissions pipeline) and rent that whole time, or buy a place by the end of 2017. At this point we are able to comfortably qualify for $700k with 10% down and plenty in reserve. We learned this amount barely gets a 1 bedroom apartment in a less than ideal neighborhood in SF. I read Wes Blackwell's post yesterday and literally drove as fast as I could to Sacramento to checkout different neighborhoods (nice writing, Wes):

https://www.biggerpockets.com/forums/621/topics/39...

Luckily I am in a position where I can transfer my job fairly painlessly at this point in my career to our Sacramento office. My wife may need to find a new job, but she may be able to work remotely for a time. This remains a big question mark at this point, but is something I think we can deal with.

Looking at almost all of the multi unit (2-4) places yesterday in the Midtown and East Sacramento areas I got really excited about house hacking. We can afford a turnkey 2 unit, day one, in a great location, where I would be stoked to live. As my uncle (we have family in the area) and I drove around Midtown yesterday, I was surprised to learn just how much energy and money is rushing into the Midtown/Downtown areas with plans for big developments, such as:

1. Rail Yard Development https://www.cityofsacramento.org/Community-Develop...

2. River Front Development https://www.cityofsacramento.org/Community-Develop... and http://www.riverfrontstreetcar.com/

3. R Street Redevelopment http://www.sacbee.com/news/local/news-columns-blog...

Some other pluses: 

Midtown is laid out on a grid system with much of the restaurants, microbrews, art studios, yoga classes, coffee shops located on the center main streets (J,K,L), which means all of the surrounding residences have phenomenal walk scores. 

There is a light rail system that can take people to the airport is in the works: http://www.greenline2airport.com/

I think it may be tough to find a 2,3, or 4 unit place in Midtown that will cashflow day one. But considering my alternative is burning $36k/ year in rent, I think I would rather jump in and break even on cashflow and take the risk on rents rising and appreciation in the long run. I plan on house hacking for 2-4 years to save up for another down payment and establish my sales commissions before going out and getting another property. Ideally I would love to find a side-by-side duplex, each unit w/ 2beds/1bath, with one side in need of some work, and the other side move-in-ready that can rent for at least $1,800/month. I would live in the side that needs repairs and either fix it up over time or try to wrap the repair cost into the loan with a 203(k).

Would love to hear input from those of you who live in Sacramento. How does it feel that people are pouring in from the Bay Area? I spoke to a woman who worked at Beers Books and told her what I was doing, and she mentioned how rents were going up like crazy, but that it was nice to have so many new people coming to the area. I think communities going through changes like this are going to have growing pains, and I want to be sensitive to my outsider perspective. I personally am really excited to get involved in the community when we move there. Investing where I live and work is exciting for many reasons, financially of course, but also relationally, spiritually, and psychologically to be rooted and invested in a place and to actively promote the well being of that place. 

I will be traveling to Sacramento many times over the next 4 months as we try to find a deal to close on. I would also love to connect with the BP community there. Please reach out if you would like to connect or have any potential deals, advice, or are in the same boat and are considering a similar move.