San Diego Cash Flow and House Hacking

[Abhi Kotti]

I will be entering my final year of college and may be receiving a full time offer in San Diego upon graduation May 2021. Me and my girlfriend want to start investing through house hacks of our own. We're wondering how cashflow looks like in the expensive San Diego market, especially when house-hacking. Does anyone have experience house hacking in the San Diego areas, what methods have worked for you? Rent by the room? Airbnb?

Coming from Arizona, if we end up moving to San Diego what are some recommended cities/zip codes to look into as well?

[Nicole Holcomb]

Hi Abhi, Welcome!

I have been house hacking in San Diego for the last 5 years and I think it is the best way to enter into the expensive San Diego market. Renting by the room has worked well for me as San Diego has a large student population between UCSD, SDSU, USD and many junior colleges. There is always demand for room rentals and San Diego has great opportunities in the multifamily 2-4 unit market. For my house hacks I choose 4br SFRs in north coastal San Diego (92024) and I always made sure to purchase properties with a separate entrance for at least 1 of my tenants. Having a separate entrance and making a portion of the house into a mini studio allowed me to charge more and kept my tenants happy.

There are FHA loans available for owner occupied SFR and multifamily properties with as low at 3.5% down making purchasing in the expensive San Diego market possible if you have the W2 income to qualify.

California also recently eased restrictions on accessory dwelling units (ADUs) and junior ADUs. Each SFR can now have 1 ADU and 1 JADU, it is pretty much a house hackers dream come true. I have a 1,000sq ft 2br ADU and am considering converting my garage into a JADU to up my monthly cashflow.

Vacation rentals are extremely successful for my clients in the beach neighborhoods. Beach neighborhoods may not be in your budget for a first purchase but the neighborhoods surrounding the convention center can also be a great opportunity for AirBNB and can be more affordable. 

92105 and 92115 are zips in a rapidly up and coming area with affordable multifamily properties. The San Diego market is dynamic, exciting and always changing, I love it and hope you will too.