One question that has been asked frequently on this forum is "how do you live frugally in the San Francisco Bay Area?"
There has been much moaning over how to keep expenses down in SF. Otherwise reasonable folks have pulled their hair out, rendered their clothes, and screamed that it is impossible.
I'm going to tell you about my method for living cheap in San Francisco. You'll need about $15k of capital and good credit for this to work.
First some background: Real estate, and especially rental prices across much of San Francisco are much higher than in the rest of the country. This is a topic of much discussion across the city and a variety of reasons have been given for this phenomenon. One key reason is that the planning & permitting process is long, expensive and political. As a result, SF has built nearly no housing over the past decade. Heck, in the last election, we had two ballot measures on whether or not to put up a single apartment building. (The building was not built.)
The median price for an apartment in SF is ~$3200. The median home price is ~900k. (4/2014)
1) Rents are high. Landlords are winning. If you can't beat 'em, join 'em
The average price for a home in SF is nearly a million dollars, but you can get one for around half of that if you live in a less trendy neighborhood.
* Warning: this method will not work if you are afraid of brown people
Head to the southeast sector of SF and you can find a 3-bedroom single-family house for $400-500k. Because the area is underserved, there are special loans (private, not government subsidized) available that will give you excellent interest rates with 3-5% down and no PMI. No closing costs.
Example with rough numbers:
House: $450k
Down payment & misc fees: $16k
Interest rate: 4.0%
Mortgage payment: $2100/mo
Taxes & insrurance: $550/mo
Now that you are a landlord, you get to benefit from San Francisco's absurdly high rents. The average rent for a bedroom in a house in SF is ~$1200. Since you are in a less trendy neighborhood, lets suppose that you get $900, and that you rent out two bedrooms.
Monthly payments: $2650
Income from roommates: -1800
Tax deduction ~= taxes on income from roommates - cancel out (roughly true during first few years)
Portion of monthly payment going to principal: -$700
Maintenance: $200
Your net "rent" (your actual cost of living there): $350/month
Ta da! You're living cheap in SF. You may not live in the Mission, but you're still close enough to the party that you don't need a car, etc. Enjoy.
Wow, I didn't realize that people wouldn't believe me. Attached is a list of current listings and recent sales that dropped into my mailbox last week.