New Grad Considering House Hacking in San Diego

[Account Closed]

Hi all! I've been spending the last few weeks reading a lot more about investment properties and learning about the world of real estate. I've spent a lot of time on the forums here and listening to the BP podcast. I really like the possibilities that real estate investment opens up, of course, but I was hoping to get spark a little discussion on the San Diego market in particular. I recently graduated from college and began working full time here in San Diego, and I can see myself staying here for a while. 

From what I've read so far, it seems that some form of house hacking would be the best first step for me. I've been looking at 2-3br apartments, condos, and townhomes in the Mira Mesa/Sorrento Valley/La Jolla university area where I could have renters living with me in the other bedrooms. However, it kind of seems that the market is just not in my favor right now. I'm finding it difficult to find places where monthly rent for the property covers the mortgage, much less any maintenance and fees or cash flow. Obviously San Diego is really competitive, but is this just the wrong strategy for this area? Am I out of luck in San Diego given my newbie status, or do I just need to stick with it to find the right deal? I spoke with a local agency and they believe it's still a viable situation given where interest rates are right now and that the market is back to "neutral" from the strong seller's market, but I don't know if I'm just better off investing outside of San Diego to gain benefits from REI.

I'd love to hear your thoughts! 

[Spencer Cornelia]

@Account Closed You're looking for houses that will cash flow in San Diego with I'm assuming a low down payment after 10 years of wild appreciation in one of the most desirable places to live in America...

Your head is in the right place, but maybe we need to temper expectations first.  As an example, let's say your options to rent are going to cost you around $1,000 a month for a room and another $200 a month for any various utilities.

If you "house hack" and get your living expenses down to $200 a month total, you will be saving $1,000 a month.  $12k a year cash.  That's a huge return.  Sure you aren't technically cash flowing, but your finances are in a much better position than renting.

Me personally: what I would do is find a 5 bed house in a nice area where the seller is willing to do some sort of seller financing.  Furnish the rooms and then rent by the room.  $750 a room total gets you to $3k a month cash.  That would probably cash flow or break even at the worst.  I have a house hack in Vegas that cash flows around $1,200-$1,400 a month after all my living expenses are covered.  It's a great way to get started in this game.