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EXECUTION First House Hacking Adventure

Strategery

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I’m making this thread for anyone interested in learning from my mistakes/successes in house hacking. I got the idea of house hacking from the @G_Alexander post here.

The general plan is to purchase a multifamily home that has between 2-4 units, live in one unit and rent out the other unit(s) so that I may live “rent free.” This isn’t intended to be a Fastlane business, but will hopefully provide runway for one in the future.

Where I’m currently at:
I have just under $25k, and make around $80k per year at my current job. So basically unless it is a derelict shit hole, I can’t get an FHA loan for anything commercial (more than 4 units).

What I’m doing:
I’ve been looking on Trulia for properties, and in my area there isn’t a whole lot available. So I’m sorry if you are looking for an action-packed thread, it may take some time for the right deal to come my way.

I’m supposed to meet with a Mortgage broker tomorrow to get pre-qualified for a loan. He wants me to apply online first through his website. I’m not really sure about this, because I feel like it is committing me to him unless I want to submit many applications and ding my credit score, which would be no bueno.

I’m not currently working with a real estate agent, but there was one a while back that was at an open house who I struck up a conversation with. He was very knowledgeable about house hacking and turned me on to the Bigger Pockets guys, so I’m going to internet stalk him and see what his reviews look like.

What I’m reading:
I’m currently listening to The Audiobook on Rental Property Investing by Brandon Turner and toilet reading The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges, since they were recommended to @BellaPippin in her recent post. Any solid book/resource recommendations will be taken seriously. I can listen to audiobooks at work without my work suffering.

Potential local mentors:
I know of two locals who make most of their income (I’m assuming) from rental properties. I see one fairly often, and he’s nice enough to humor my questions. He said he would help me find a property manager when the time came. I haven’t spoken to the other one, just heard about him from my dad.

Why I’m doing all this:
I highlighted my current living situation in my intro post here. If you don’t feel like reading it, I’m 34, I live with my parents and brother (and his F*cking dog). I work at a family business. Our relationship (collectively) is stable for the moment, with the potential to implode over the slightest offense. I really hate the way it is, and it is always better when we have space from one another. They don’t support anything that I do outside of the family business, but still refuse to take my suggestions for improvement seriously (after all, I’m the youngest). In the future, the business will be a point of contention between my brother and sisters if I decide to stick around, and even if it were all going to be in my control (no chance), I would only have my dad’s death to look forward to. I would rather be a son that could provide value instead of taking it; one who could have a relationship with his father rather than a business arrangement. So it is in my best interest and more importantly theirs if I can make my own way through life.

So when I do decide to jump ship from my current job, it would probably be a little awkward if I were still living with my employer.

Also, living in an environment that takes energy from you is no bueno, and I’m definitely there now. So F*ck this shit.

Summary:
So there you have it. I’m doing some shit. And I’m super excited about it. I really think I’m going to enjoy the management aspect of this. If you are considering house hacking, feel free to ask me any questions about what I’m doing and I’ll give you all the value that I can provide…I’m no expert. I’m barely a functioning adult. Keep that in mind.
 

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broswoodwork

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I’m making this thread for anyone interested in learning from my mistakes/successes in house hacking. I got the idea of house hacking from the @G_Alexander post here.

The general plan is to purchase a multifamily home that has between 2-4 units, live in one unit and rent out the other unit(s) so that I may live “rent free.” This isn’t intended to be a Fastlane business, but will hopefully provide runway for one in the future.

Where I’m currently at:
I have just under $25k, and make around $80k per year at my current job. So basically unless it is a derelict shit hole, I can’t get an FHA loan for anything commercial (more than 4 units).

What I’m doing:
I’ve been looking on Trulia for properties, and in my area there isn’t a whole lot available. So I’m sorry if you are looking for an action-packed thread, it may take some time for the right deal to come my way.

I’m supposed to meet with a Mortgage broker tomorrow to get pre-qualified for a loan. He wants me to apply online first through his website. I’m not really sure about this, because I feel like it is committing me to him unless I want to submit many applications and ding my credit score, which would be no bueno.

I’m not currently working with a real estate agent, but there was one a while back that was at an open house who I struck up a conversation with. He was very knowledgeable about house hacking and turned me on to the Bigger Pockets guys, so I’m going to internet stalk him and see what his reviews look like.

What I’m reading:
I’m currently listening to The Audiobook on Rental Property Investing by Brandon Turner and toilet reading The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges, since they were recommended to @BellaPippin in her recent post. Any solid book/resource recommendations will be taken seriously. I can listen to audiobooks at work without my work suffering.

Potential local mentors:
I know of two locals who make most of their income (I’m assuming) from rental properties. I see one fairly often, and he’s nice enough to humor my questions. He said he would help me find a property manager when the time came. I haven’t spoken to the other one, just heard about him from my dad.

Why I’m doing all this:
I highlighted my current living situation in my intro post here. If you don’t feel like reading it, I’m 34, I live with my parents and brother (and his F*cking dog). I work at a family business. Our relationship (collectively) is stable for the moment, with the potential to implode over the slightest offense. I really hate the way it is, and it is always better when we have space from one another. They don’t support anything that I do outside of the family business, but still refuse to take my suggestions for improvement seriously (after all, I’m the youngest). In the future, the business will be a point of contention between my brother and sisters if I decide to stick around, and even if it were all going to be in my control (no chance), I would only have my dad’s death to look forward to. I would rather be a son that could provide value instead of taking it; one who could have a relationship with his father rather than a business arrangement. So it is in my best interest and more importantly theirs if I can make my own way through life.

So when I do decide to jump ship from my current job, it would probably be a little awkward if I were still living with my employer.

Also, living in an environment that takes energy from you is no bueno, and I’m definitely there now. So F*ck this shit.

Summary:
So there you have it. I’m doing some shit. And I’m super excited about it. I really think I’m going to enjoy the management aspect of this. If you are considering house hacking, feel free to ask me any questions about what I’m doing and I’ll give you all the value that I can provide…I’m no expert. I’m barely a functioning adult. Keep that in mind.
It's a nice feeling to only be on the hook for <$200/mo with tenants paying the mortgage. I did it myself back in 2003 when banks would give a $250k loan to an upturned mop with a bucket for a head on a 3 family sand castle. (Anyone else miss Countrywide Home loans?)
 

tpuffer

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@Strategery - Congrats on getting started with something! The real question is are you going to push through when you get 6+ months in and STILL haven't found a good deal?! I just did my intro post if you want to check it out to get my background.

It took me about 8 months to find my duplex to house hack. I got my real estate license to look at deals that were on the market. I didn't like any of them and sent out hand written letters to the ugly duplexes in the nice neighborhoods and eventually found one I liked.

When doing house hacking it is nice to have your mortgage almost covered, or most of the way - BUT you also need to underwrite for the exit. What I mean by that is you need to know what the numbers look like for when you move out of the building eventually.

By the way - I made $50K per year and had $7K in the bank when I bought my place. I actually liquidated my 401K (because they are pointless) of $5K and used 0% interest credit cards to finance the purchase and renovations. After having the place renovated and rented for 6 months I got a HELOC on the building and paid off the credit cards. So you are WAY ahead of where I was!
 

Ocean Man

Asia's trailblazer
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I'll be following this thread as it's something I've been considering doing as well when I come back to the states. The only difficult thing for me is staying locked into one place for an entire year for the FHA loan. I'm a digital nomad and have to travel several times during the year and live in different countries. As for that reason, the one year FHA requirement doesn't quite suit me at the moment.

Good luck on your journey, and looking forward to hearing about your progress!
 
OP
OP
Strategery

Strategery

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The real question is are you going to push through when you get 6+ months in and STILL haven't found a good deal?!
I've been looking for a few months already, and it's frustrating, but I'm keeping my nerve.
I just did my intro post if you want to check it out to get my background.
Yep, it was a good read, and I'm glad to have folks like you around.
I got my real estate license to look at deals that were on the market.
Do you think it is worth it to get my license?
 

tpuffer

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Do you think it is worth it to get my license?
[/QUOTE]

I can say that the benefit to having your license is if you do end up purchasing a listed property then you can keep some commission - I have done this a few times. So it has overall been beneficial.

That being said it totally isn't necessary to have a real estate license to invest in real estate!
 
OP
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Strategery

Strategery

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Update:

Today I met with a loan officer to be prequalified for my loan. He was nice and had a Casey Kasem voice. The simple version is that I have to get him more of my pay information to prove that I’m not a liar. I asked to borrow $300,000, which is the reason for the runaround… basically, my back-end ratio (aka debt to income ratio) isn’t quite what it needs to be due to a $60k student loan debt, and I have to prove that I’m going to get a bonus this year to improve it.

My credit score was good, just under 800. So things are looking like I’ll get some money to do this thing.

Later I was driving in town and got the sudden urge to call up the owner of a house that I’ve been curious about. It’s for sale by owner. It’s a really big, really old house close to downtown and the local college. It usually has a 1965 Pontiac GTO in front of it, and today was no different. I was told later that it had previously been split into 4 units, so with some work I could return it to it’s cash-flowing glory.

The lady I spoke to encouraged me to just drop in, so I did. I was there for just under 3 hours! It was owned by an older couple who apparently took a liking to me (they wouldn't let me leave without telling me everything they knew about everything). They wanted $325k for it, and their deal was that if I gave them $20k (what they’ve put into paying off this loan) then I could assume their VA mortgage at 3.2%, instead of the 4.125% that the aforementioned loan officer suggested was the best I could do.

The GTO was also for sale for $20k lol.

It’s the best offer I’ve seen since I’ve started looking, but the overall cost makes me super nervous. It's just a lot of F*cking debt.

That being said I need to put it through the wringer in terms of inspection. I also need to figure out what I can rent it for. I need a copy of the floor plan so that I can figure how I want to split it up for apartments, and I have no clue how to find that. My biggest problem is that I don’t know what I don’t know, so I’m having to read from google searches and books as I go. Oh well, at least I know what I need to focus on.

Whether or not this is the best deal ever or not, I learned something from the interaction. This house has been on the market for around 2 months and I kept ignoring it because I thought there was no way I could ever afford such a big place in town. But when I stopped dismissing the idea, and stopped being reliant only on online listings, I found out that it’s not so far out of reach for me after all, and there are more options than what is conveniently found with real estate apps. It could in fact work out well.
 

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