Moving to the Bay Area | How reasonable is house hacking?

Question

I'm new to real estate and recently got a new job in the Bay Area that pays really well.  I've always wanted to get into real estate and figured this new job will give me the right income to get into it and really help me start building wealth and earn cash flow on the side.

I wanted to get a better understanding of what the market looks like down in the bay area and California in general.  I'm open to house hacking or finding an investment property that's a few hours out that I could reasonably manage by putting in time on the weekends or getting a property manager.  From what I've looked at on Redfin, there aren't too many opportunities to house hack since the property prices are insane so I'm leaning towards finding an investment property maybe outside of the Bay and more near Fresno or up north in Sacramento.

Would appreciate some ideas/input from someone who knows the area and has experience!

Matt K. · Answer

Def rent, you can find solid deals on Craigslist or hotpads that at far cheaper than what a mortgage would be....

and then invest out of state.... But don't pick your investment off numbers alone. Being a landlord even with a property manager isn't some faceless spreadsheet, it's actual people. Find something where people want to actually live, actually have good jobs, and a sense of community.... These places will vary greatly based off budget but they exsist all over.

Become the expert of the areas you're investing in. In a sense you want to act like you're moving there...you'll know the good /bad deals and areas. Understand where the good jobs are and where those people work/commute from. If you want to mix it up, same goes for schools but that's harder. You need to look at the news and community sites for that info...

The side benefit to this is you'll be able to sort through the all noise and know what rents should be vs what they're listed for when hunting deals. Also helps find a property manager who aligns well with you and your property type, they are not all the same no matter what your spreadsheet tells you.

Lastly, consider travel/flight times... And Go check out the area before you make offers. Put your research to the test and drive through the spots you looked at to see if they still "work" but listen to your gut. They'll always be deals if you can pick and area and focus.

Jeff Zimmerman · Answer

@Sahir Noorani Fresno has been really good to me from an investment standpoint.  Bay area money usually goes pretty far here.  MFH's are in high demand right now which is pushing their cap's down, but cash flow is still very possible with the right deal but recently i've been surprised at the amount of cash flow investors are taking out of SFH's right now.  If you'd like to talk more about Fresno feel free to message me, i'm happy to answer any and all questions you may have.

Ryan Landis · Answer

@Sahir Noorani depending on your down payment, and how flexible you can be in location, it is not too terrible if you look in the East Bay (Oakland, Alameda, etc.). If you need to live in SF/Peninsula, more likely you will need to be renting out rooms to really make something come close to breakeven. That being said, getting the Bay Area income and having anyway to make your housing cost lower makes it a win-win

Brian Garlington · Answer

I'm house hacking right now in a duplex I bought in Oakland.

Blake Edwards · Answer

@Sahir Noorani Congrats on the job!  We always advise our clients who are interested in House Hacking (and investment properties for that matter) to look at each individual property with a creative eye.  A home on paper usually doesn't work right off the bat.  Look for value add opportunities that other have overlooked and find a way to maximize the value according to your criteria and goals.  Good luck!  There are plenty of opportunities out here and ways to make it work!

Monica Lewis · Answer

The Bay Area is so expensive that I imagine you will need a lot of capital to start.

Jay Hinrichs · Answer

U can easily do this in Richmond and out toward Vallejo. that north east of Berkley..

Ori Skloot · Answer

You absolutely can house hack in the East Bay.  If it’s a longer term hold of 3+ years then you could do an owner move-in to an under-market rented apartment in a triplex or quad. Other units could pay for the mortgage and you live for free(ish).  You get cash flow and Bay Area appreciation.

Daniel Z Fang · Answer

Welcome to the Bay! I work a full time job and my family keeps me busy so in my limited free time, I haven’t been able to find anything that will work. I think the bay is an appreciation move if your time horizon is long enough. Of course you can find properties and add value, but you’ll have to weigh the work of that against how you value your free time. You can buy cash flow by putting a greater % down, but there’s an opportunity cost to using your cash in this way. Personally I’ve gone out of state for these reasons.

Chris Mason · Answer

"Reasonable" is a subjective term. And "House Hacking" is a term made up by this website with no fixed definition. :)

3.5% down FHA San Jose Fourplex? Listing agent will throw the offer in the trash, you're up against "Lucky IPO" money putting 40% down with no appraisal contingency.

Normal owner occ SFR that's larger than what you need (f. ex. if a single person with no kids), rent out the extra space? All day long, go for it.

Also nothing at all wrong with picking up a plex in Sac, if the right one catches your eye...

And so on.

Moving to the Bay Area | How reasonable is house hacking?

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