Expensive Market House Hack, 0% down, Does it work?

[Nicholas Glatter]

Hi BP champions,

I just recently moved to San Diego. Looking to house hack with VA loan, 0 Down. This sounded great in theory but does 0 down in an expensive market even work?

Here's a demonstration property I recently offered on:

Total Price: 487,000

Mortgage w 0% down at 3.5int.: 2,229

Property Tax: 507monthly

Insurance: 80

No PMI and for this example lets just not worry about 5% vacancy, set a side money, etc.

That brings us to 2,816 (much higher if I set aside 5% each month)

Now in theory renting out the rooms in this area for comparable properties at 1k a room would bring me to -816 out of pocket which is ok as far as bringing down my monthly expenses on renting vs owning. But if I try to rent the house out as a stand alone property, 3b2b in the area only go for 2,400 (so basically an L on my investment property.) 

No matter what combo I look at 0 down just throws the numbers way out of wack and it doesn't work. If the property in San Diego costs more than 500K it moves my lost income higher and lets be real, not a lot of decent homes under 500k here. Has anyone had any success with this or any ideas on how to get around it? 

I've considered condos and townhomes where the overall price is lower but kinda scared to get into HOA fees.

Any advice would be great from those who have beat this hurdle.