All Forum Posts by: Joshua J Cawthorn

 Thank you for the kind words! Both are in North Park (92104) and my current house hack will cash flow once I move out and rent out the unit. Feel free to PM me and we can swap info about it, I'd love to hear what you're working on!

I house hacked my initiah SFH for years before finally moving out and renting it under one lease. Now I live in and house hack a duplex.

Hi John. The way I see it, you have three options:

1. Find value add. Can you rehab? Add a bedroom, bathroom, or some impressive curb appeal/yard improvements? What can you do to make your house(s) match the high end of the comps in your area? You could force market appreciation that way and then refinance.

2. You could sell the properties. Either pay the taxes on the gains or 1031 exchange into another property (in either of those cases, you'll want to consult a CPA or 1031 professional to discuss strategies). That would be a way to offload these properties entirely and then rid yourself of their burden and/or try to find a more lucrative investment. It's possible here in San Diego! 

3. Do nothing, keep funding the monthly losses, and wait for the natural market appreciation that california is famous for. While I do believe that strategy will EVENTUALLY pay off, you're looking at a solid 5-10 years before those puppies appreciate enough in value to make some money on them- most notably with the inevitable real estate correction in response to our current economic client. This is my least favorite option. 

Good luck and keep us all updated! The data makes us all stronger and wiser!

I'm not a lender, so I will only speak from my personal experience of using the VA loan to buy a SFH and, subsequently, a duplex (both here in San Diego). The two years of provable work history isn't mandatory so much as it is preferred. I had just signed a W2 job after a length period of unemployment (surviving on under the table cash hustles), and my acceptance offer for the W2 job became enormously valuable to prove future income.

Another requisite of using the VA loan to buy any multifamily property is being able to prove landlord experience. Although I had been successfully house hacking and renting out my SFH for about 5 years when I was going through the application process, I'd only had a single 12-month lease on my then-most-recent tax return. I believe we overcame this hurdle by agreeing to use a property management company for the duplex I was buying (you better believe I didn't follow through with that contract once the funds were approved).

One generous advantage of using the VA loan as a qualified disabled vet is the waiving of closing costs- that'll save you in the neighborhood of 3.3% of the closing sale price! The qualifying income that I believe any lender will use will be whatever shows up on your tax return, which is one incentive to earn all your income legitimately rather than constantly accepting cash/under-the-table gigs (like I did, for years). As others have mentioned, they will also accept 75% of the market rate rental income for any multifamily deal. The duplex I bought is a 3/1 and a 1/1; since my plan was always to occupy the smaller and less valuable unit, the potential earned income for the larger unit was obviously much more valuable.

Hope that helps, fellow vet!

Hi Andy,

Fellow North Park resident here. Nice find! I bought my first property in 92104 back in 2014, it's been fascinating to watch the relatively meteoric rise of this neighborhood in the past few years. The area seems to continue to gentrify, with demand continuously rising. I am excited about the long term potential of this area! 

Awesome! Based on that credit score and income, you could probably qualify for a good amount to buy a house with. Lenders will also factor in debts you have (commonly referred to as "DTI" or debt-to-income ratio). I'm sure you could qualify for an FHA loan on a SFH (single family home). If possible, I think you should aim for a duplex or triplex. A SFH or MFR (multi-family residence) may not cash flow- even for the first few years. San Diego is a unique market. It's super expensive to buy, so it takes a few years to break even. If you can wait 5-10 years, you'll experience extraordinary market appreciation that is also relatively unique. Here in SoCal, it's a much longer timeline and a different strategy than other markets where the could begin immediately while there's virtually no market appreciation.

Hey Alejandro,

If we are speaking in hypotheticals, then sure this sounds like a good plan. However, lending will have to be considered. Take some time to consider how you plan to fund your house hack. What time type of loan do you anticipate using? Are you putting any money down? How about money to pay for any repairs, in case things go wrong? Are you a first time home buyer? Lenders will factor all of these things in and, accordingly, will be pretty conservative because you may appear to be a risky borrower. It's pretty easy to overcome a lot of lender's concerns by having a large amount of money to put down (in the neighborhood of 20% is pretty common).

You'll see a lot of "investors" scared to get started in San Diego for exactly this reason: it's a lot more expensive to put 20% down in San Diego than it is in, say, Ohio.

 Hi Matt! I'm in North Park, glad to have you here! Can you tell me what you mean by "tell you the feasibility"? 

 I'm there! Where's your office? And where will the meetup be on the 7th?

Good call, @TJ Watson! I am also personally a bit fanatical about Kiyosaki, but mostly because the principles are sound: buy assets to pay for your life and gradualyl wean off depending on W-2 income. That holds true for the San Diego market, the initial barriers to entry are just higher. There is, however, a reward to offset this initial hurdle: the strong appreciation means greater rewards on the back end in the form of higher property values than, say, the midwestern markets where initial cash flow is easier to obtain.

If you have access to the VA loan, the $0 down deal is incredible. I've executed two home purchases using the VA loan (so far), and I'm looking forward to my third later this year. Find a decent deal, rent out by the room, try to break even for the first few years, and don't slow down. Imagine how your portfolio will look in a decade or two!