House Hacking vs Renting in Bay Area, CA

[Sunny A.]

Hello everyone,

I've read a few posts on the housing market here in the Bay Area. Given how hot it is, would you recommend:

1. House hacking

2. Renting

If you recommend house hacking, how do you go about finding deals in the Bay? That is, if you were to rent out all units in the multi-family, the numbers would make sense from a cash flow perspective.

[Michael Hastings]

@Sunny A., thanks for asking the question.  I grew up in the Bay Area (Oakland) and worked in the Silicon Valley (Sunnyvale / SJ) for many years, I know there is an uphill battle you are facing with housing and weighing your options.  The facts are that the prices are not inline with the salaries of all in that marketplace, which is why so many people work there, but migrate out to Tracy, Stockton, Patterson, Modesto, Sacramento, etc., for living, where the prices are a bit easier on the wallet.  But, who wants a 2 - 3 hour commute one way?

There are benefits to renting in some markets (NYC/LA) and for some people based on their situation (transitional), although I would not recommend it as a long term solution to building wealth.  I assume you are after that, since you are here in Bigger Pockets, a forum for real estate investors.

That being said, I totally believe it to be possible to house hack in the Bay Area, although it is going to take some investigation and flexibility on your part.  You may have a smaller place.  You may not live in the best area.  You may be a little further from work.  You are going to be living with your tenants, know all of this in advance.  I believe there to be options through using short term rentals (like airBnB) and some long term rental situations (like multi-family) to offset your monthly living expense.  @Ben Leybovich said something in his book on house hacking that was profound to me, which stated "you can afford anything, if it pays for itself".  I really wrapped my head around this statement, and it has changed my whole outlook on affordability and my living arrangements.

Since you are in a market where the prices are higher, I would advise that you should be looking for a living arrangement where you monthly housing cost is either eliminated or reduced significantly through house hacking or multi-family property investments (where you live in a unit and rent the other(s)).

Go online and do some research on home prices, and do some analysis where your can find a living situation in which someone else will be paying the lion share of the mortgage.  Not to make light of your situation, but I can guarantee people are doing this every day in your area.

Good luck, and I hope this helps.