Guide to House Hacking in San Francisco, California

Interested in house hacking, and now you’re wondering about house hacking in San Francisco?

That’s probably a good idea if you find yourself needing to grab housing in the Bay Area because a paycheck that would make you wealthy in many other cities won’t cover monthly expenses in expensive San Francisco.

From an investment point of view can San Francisco make sense for house hacking?

Let’s take a look at one of the priciest large city real estate markets in the country to find out.

In this post, we’re going to give you all the information you need to do decide if house hacking San Francisco is the right decision for you and what you need to do to pull off the strategy. Let’s dive in!

San Francisco: Tenant Friendly, or Landlord Friendly?

California is one of the most tenant friendly states in the United States, and San Francisco is likely the single most tenant-friendly big city in the entire state on top of that, with Los Angeles being the only city really competing with them on that front.

This puts San Francisco very firmly in the tenant friendly camp and the local rules and courts are much more likely to fall on the side of the tenant than the landlord.

This, along with San Francisco’s other unique challenges when it comes to real estate, would scare me off from wanting to invest, but for those whose careers are in San Francisco or have other reasons for needing to be in the area, if you’re willing to invest in heavily tenant friendly areas then there’s still potential in this market.

Let’s dive in further.

San Francisco Demographic Data Analysis

When doing our initial analysis, we use six major data points measuring various parts of the demographics that tell us how healthy the local property market is.

These are population growth, income growth, property value growth, crime level, crime change, and job growth.

When it comes to these six metrics, this is how San Francisco compares to our benchmarks:

Data PointBenchmark (since 2000)San Francisco
Population Growth20%13.5%
Income Growth30%124.3%
Property Value Growth40%136.6%*
Crime Level< 500454
Crime Change0% or declining-3%
Job Growth> 1%4.58%
*The full number could actually be more as most of the data sources we use stop tracking at “Over $1 million” instead of getting more specific, so we use one million as the benchmark for measurement.

Overall, a San Francisco house hack has serious potential based on the 6 demographics we use to analyze the markets, hitting the benchmark on five out of 6.

Although San Francisco falls short with population growth, the other metrics look good.

Especially the economic ones. So if you can deal with the market prices and are okay with investing in a tenant-friendly market then the numbers suggest this can work.

4 Strategies for House Hacking San Francisco, California

Let’s be honest, San Francisco is a challenge because even with very high rents, the properties are so expensive on average that house hacking is often the only viable option for very modest housing even for earners who would be considered affluent elsewhere.

Here are 4 top strategies for house hacking San Francisco.

Scour Working Class San Francisco Neighborhoods for House Hacking Opportunities

Considering San Francisco still has plenty of areas with crime problems and homeless issues, I can understand the hesitation to look at working class or sketchy neighborhoods in the city, but the very nice neighborhoods generally have houses way over that $1 million average and you won’t find a deal because the demand is so high.

You’ll be paying (or overpaying) full retail because the demand is so high. That means for finding a good deal the focus needs to be on working class neighborhoods that are up and coming or have that potential for further investment.

This can be very tricky and requires on the ground knowledge – even more so than most cities.

Creative Use of Space for House Hacking

In many cases renting the second living quarters of a duplex can cover a good chunk of mortgage payments, but not the whole thing. This is still good, as that saved money can be put aside to pay off a mortgage or other debts early.

Consider renting out storage space from the garage or if you have street parking, creating a garage apartment or furnished basement apartment.

There are many college students or entrepreneurs in their early 20’s looking for a location close to downtown or another part of the city. Consider renting out the couch (though obviously for less than a room or living unit) for the summer or a semester.

This won’t work for everyone, but get creative with the options that are available to get the most out of a house hacking situation.

Focus on Multi-Family Properties to House Hack San Francisco

Since the majority of mean prices are going to be over that million dollar mark, it makes sense to look for multi unit properties.

If the prices are in the same range, having an easily hackable property makes a lot of sense when trying to make the numbers for San Francisco, CA work.

Even at nearly $2,000 a month for average rent, it can take multiple renters to cover the average price of a mortgage in San Fran.

Duplexes, Triplexes, and multi-family homes are setup for house hacking and provide an excellent way for investors to get started.

That way if you need to move a few years down the line, you can also just rent out the unit you were living in after you move.

Harness the Power of Short-Term Rentals

Not only is San Francisco a major tourist destination, but because average hotel prices are so high that also means the average Airbnb rental rates for the city are also among the highest on the site, meaning you earn a lot more per night than if you’re renting out of smaller less popular cities.

Short-term rentals can be incredibly powerful when house hacking San Francisco, and occasionally may even provide extra cash flow on the month after covering the mortgage during a good stretch.

This is a smart way to get the most out of you house hack.

Expensive Housing: The Biggest Challenge to House Hacking San Francisco

San Francisco is one of the most expensive housing markets in the entire country, and just as we talked about in our Austin house hacking guide, this is a market where the cost is likely to be the most prohibitive barrier to entry.

The mean price data on each type of housing in San Francisco according to City Data is:

  • All housing units: Over $1 million
  • Detached houses: Over $1 million
  • Townhouses: Over $1 million
  • Duplexes & 2-Unit Structures: Over $1 million
  • 3 & 4 unit structures: Over $1 million
  • 5+ unit structures: Over $1 million
  • Mobile homes: $356,181

The mean rent is listed at a whopping $1,959 a month, even with the many local and state rent control programs in place.

That means for a conventional loan you need over $200,000 on hand to have the 20% down most banks want to see. When a mobile home is over 1/3 of a million dollars, we’re dealing with a very expensive market.

The best bet for most buyers will be finding an FHA loan for house hacking to get a low down payment for their first home.

These challenges have been discussed in detail by those who have had to make house hacking in San Francisco work, as this Bigger Pockets Forum thread is one example of first-hand advice on that very topic.

How to Tell Up and Coming Neighborhoods from Bad Ones in San Francisco

This is a hard one to figure out because a lot can change in a very short time.

There’s also arguments over what are considered neighborhoods versus suburbs, and an area that can be up and coming at the time of publishing this article could already be too expensive one year later.

That said, there are some neighborhoods that have shown consistent signs of improvement and the ability to weather local and regional storms whether economic or otherwise. These are places worth at least looking at as you start your search.

Best “Up and Coming” San Francisco Neighborhoods to House Hack

  • Daly City
  • Brisbane
  • Parkside
  • Golden Gate Heightr
  • Excelsior

New arrivals to the city should also consider talking to the San Francisco Public Works Office since they focus on improving and working with neighborhoods.

Talking to people in this organization can give direct insights on what neighborhoods are getting major investment, which are struggling, all from locals with a first hand look at it.

Should You House Hack Airbnb in San Francisco?

There’s no denying the cash potential that comes from using Airbnb and other short-term rental services to to house hack in San Francisco. However, there are certain regulations/rules that need to be followed.

To house hack Airbnb in San Francisco the property owner must:

  • Have the property as their primary residence, living there 275+ days per year
  • Have liability insurance of at least $500,000
  • Obtain a Business Registration Certificate from San Francisco Office of the Treasurer & Tax Collector
  • Bear in mind that as of this writing, Airbnb is the only online short-term rental site that is recognized by the city authorities

Make sure all of these are in line, but the effort to take care of these is worth the reward.

San Francisco House Hacking: Should You Do It?

If you’re coming from the outside looking for a place to invest I would say no.

The huge starting prices, tenant-friendly rules, and major regulations would scare me off, especially with so many other great markets out there. Personally, I like house hacking San Jose a lot better if we’re looking at staying in California.

That said, if you love the area, are stuck there for a career, then house hacking is one of the best strategies to be able to afford a good piece of real estate by off-setting some of the costs and bringing in some cash flow to alleviate large monthly mortgage payments.

San Francisco won’t be the right city for most real estate investors but house hacking is the best way to break into this market if you think it’s right for you.

Photo of author
Analyzed by: Shane Dayton
Whether it was helping a friend build a cabin from scratch in central Alaska, scouting & analyzing Austin Texas neighborhoods, or exploring rural Iowa Airbnb potential, the variety of opportunities real estate offers have caught Shane's attention. After years of this, he brings his experience and passion for real estate to Everything House Hacking.

Learn more here.