Looking for House Hacking Advice

[CareCPA]

My very first house I rented out an extra room I wasn't using for $400/mo. Would be much higher in todays market.

I did this too. My first house, the mortgage payment was something like $600 or $700 a month (including ridiculous flood insurance). I rented out a room for $400 a month. I could have rented out the second room and paid my entire mortgage, but the house wasn't that large, so to share it with two strangers would have been too much for me (I like my space).

 

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[DustinH]

Fannie Mae offers a couple that only require 3% down. The 97% LTV and the Home Ready loan.

https://www.fanniemae.com/singlefamily/mortgage-products

Big banks like Wells Fargo, BofA, Chase, etc., have also have introduced conventional 3% down payment programs.

Low Down Payment – Conventional Mortgage – Wells Fargo

Low Down Payment Mortgage - Affordable Loan Solution® from Bank of America

Types of Mortgages | Home Lending | Chase.com

Regional banks around the southeast have started to offer these "only 3%" programs. I know Regions Bank has that program.

Another bank here, Bancorp South, is offering 100% financing with no Mortgage Insurance up to $350k. I think it has to be owner occupied, though. Not sure about the rules around duplexes, but if you're house-hacking then you would be an owner occupant.

I'm sure there's similar programs around your area. With all that being said, are you sure you only want to put 3% down? I would really think about that. If it doesn't cash flow from day 1 then it might not be a good deal. The more you borrow then the harder it will be to cash flow.

 

[DeletedUser0287]

It seems that there are duplexes, but they are all out of my price range. Was banking on only 200k. All of them are like 230k...

The bad thing about this is that, when I do move to dallas, TX. My pay will be significantly lower. Currently making 75k-80k through traveling work, stipends (tax benefits, yay!). In Dallas, I will be making like 60k...

 

[DeletedUser0287]

Most of these multi families are occupied. According to them they are cash flowing, but why would someone want to sell something like that?

It gives me a bad feeling that these inherited tenants are trouble. I really wanted to start from scratch so I could screen them. Bummer is since they are occupied, I can’t live in them.

 

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[Envision]

Most of these multi families are occupied. According to them they are cash flowing, but why would someone want to sell something like that?

It gives me a bad feeling that these inherited tenants are trouble. I really wanted to start from scratch so I could screen them. Bummer is since they are occupied, I can’t live in them.

My first ones had meth addicts with 6 kids in it. The floor was black from the grime and the walls were yellow from the smoke. Thats the value, you fix it.

You want occupied multi family because their income counts towards your overall income. You just evict or have the seller evict one of the units. It's standard practice.

 

[DeletedUser0287]

My first ones had meth addicts with 6 kids in it. The floor was black from the grime and the walls were yellow from the smoke. Thats the value, you fix it.

You want occupied multi family because their income counts towards your overall income. You just evict or have the seller evict one of the units. It's standard practice.

Wow, that would deter me right away. But the problems are the opportunities I guess.

Initially I set my budget 200k. Hypothetically, though if I qualify for a loan for the duplexes which are 230k. Would you take it in this scenario? I can't stop viewing a mortgage like margin for stocks. Borrowing a lot of money is something I fear or should I change my mentality screw it take all the money I can get. Leverage is a double edge sword. If things go bad, they get really bad. If things go well, they go really well.

Assuming I get a place in Dallas, TX and the place isn't a total dump. I should always be able to get a tenant, right or wrong assumption? I came from the ecommerce space, where this wasn't ever the case with products.

 

[biophase]

You can qualify for a lot more than $200k if you make $75k a year. You should get preapproved first so you know what you can actually borrow. Plus it will make your offer a lot stronger.

 

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[biophase]

Any agent is going to say it's a good time to buy FYI, although I think it is as well.

Here in MA, things have shifted significantly to buyers in the past 5 mo. Homes are sitting on the market longer, more price drops, less bidding wars.

Interest rates are shooting up - quick. We'll be well into the 5's next year based on how things have been going. It's going to reduce the potential buyer pool, for sure.

Those reasons don’t make it a good time to buy. They make it sound like a bad time to buy?

Sounds like it’s time to wait a year or two.

 

[Envision]

Wow, that would deter me right away. But the problems are the opportunities I guess.

Initially I set my budget 200k. Hypothetically, though if I qualify for a loan for the duplexes which are 230k. Would you take it in this scenario? I can't stop viewing a mortgage like margin for stocks. Borrowing a lot of money is something I fear or should I change my mentality screw it take all the money I can get. Leverage is a double edge sword. If things go bad, they get really bad. If things go well, they go really well.

Assuming I get a place in Dallas, TX and the place isn't a total dump. I should always be able to get a tenant, right or wrong assumption? I came from the ecommerce space, where this wasn't ever the case with products.

If you're viewing it as an investment property and not a home I feel as though the price on it's own is irrelevant.. What matters is the income it can produce with you living in it and the income it can produce once you move out.

Think of it this way,

if you pay 230k for a 2/1 duplex and your mortgage is roughly $1500 - if its an ideal investment the 1% rule states you should bring in roughly 2.3k if BOTH sides are rented. This leaves you with $800 after debt service and most likely $500 after alloting a certain % to management, maintenance etc. (You need to do these calculations on every property you look at to determine if its a good deal).

With you living in the property you would break even if you had a roommate in your side. With that being said the price doesnt matter because the income it produces offsets whatever payment you have and it makes it a good investment due to the cash flow.

You should know your markets tenant demand and where the good areas are, if you want to invest in those areas then do that. But Bio is right, you need to get preapproved to know what you can do and be effective when you're looking on the marketplace.

Real Estate is a different asset than stocks and I dont correlate it at all with stocks. You can control and impact the value of real estate in ways not possible as a casual equities investor. And the equity you create can be reallocated into other investments creating a snowball effect.

 

[exclusives88]

I'm curious, what part of Dallas are you looking where you can buy a duplex for $230k?

@Envision Would you ever consider buying a quadplex if it only break even when renting out all 4 units? My wife and I are looking for a primary residence. We like the idea of tenants paying for part of the rent. The only problem is that we'd like to live in a more upscale neighborhood and a cash flowing multi unit family home is not possible. Over the weekend, there was a open house for a $1.2mm quadplex on 3428 Potomac Ave Dallas, TX. That property would be ideal for us but from numbers point of view, it will never work out.

 

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[DeletedUser0287]

Sounds like it’s time to wait a year or two.

The only business I am really interested in is real estate, due to its high probability of success. What do you recommend me doing now. The only other thing I was planning to do was an app/software, just because product development is essentially free. But then again, since it is product based (probability of success is low).

I'm curious, what part of Dallas are you looking where you can buy a duplex for $230k?

It's like East Dallas. There is pretty much nothing though. I am also looking at Fort Worth and Arlington based on research they seem good as well. Do you have any idea what are good neighborhoods? I just know up North are the very wealthy.

If you're viewing it as an investment property and not a home I feel as though the price on it's own is irrelevant.. What matters is the income it can produce with you living in it and the income it can produce once you move out.

Think of it this way,

if you pay 230k for a 2/1 duplex and your mortgage is roughly $1500 - if its an ideal investment the 1% rule states you should bring in roughly 2.3k if BOTH sides are rented. This leaves you with $800 after debt service and most likely $500 after alloting a certain % to management, maintenance etc. (You need to do these calculations on every property you look at to determine if its a good deal).

With you living in the property you would break even if you had a roommate in your side. With that being said the price doesnt matter because the income it produces offsets whatever payment you have and it makes it a good investment due to the cash flow.

You should know your markets tenant demand and where the good areas are, if you want to invest in those areas then do that. But Bio is right, you need to get preapproved to know what you can do and be effective when you're looking on the marketplace.

Real Estate is a different asset than stocks and I dont correlate it at all with stocks. You can control and impact the value of real estate in ways not possible as a casual equities investor. And the equity you create can be reallocated into other investments creating a snowball effect.

Ok, thanks for the input. Been holding off, on getting preapproved because don't think I will find a good place in 90 days. Then lowering my credit score with every check will kill me.

 

[WJK]

You're coming into the best time of the year to buy. I've made some of my best buys in January. After Thanksgiving is always good too. The real estate market comes to a stop while everyone is doing their holiday stuff. It's a wonderful time to make a good deal.

That said, I also have a warning. You MUST have an emergency fund that you can draw on. If it can go wrong -- it will -- at the worst time.

 

[DustinH]

Most of these multi families are occupied. According to them they are cash flowing, but why would someone want to sell something like that?

Now your starting to ask the right questions. Why would anyone ever want to sell something that makes them money?

"Why are they selling?" is always, always your first question. Then, dive deeper into that.

For example, a line of questioning with possible answers that lead to the truth....
Why are they selling?
because he doesnt want to fix broken toilets anymore
Oh ok. How many properties does he own? Is selling others?
He has several others. No, he is keeping those.
So, what's wrong with this property to make him want to sell it and keep the others?
um... he just wants to focus on the other properties

Dig into truth by asking for it.

 

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[WJK]

Now your starting to ask the right questions. Why would anyone ever want to sell something that makes them money?

"Why are they selling?" is always, always your first question. Then, dive deeper into that.

For example, a line of questioning with possible answers that lead to the truth....
Why are they selling?
because he doesnt want to fix broken toilets anymore
Oh ok. How many properties does he own? Is selling others?
He has several others. No, he is keeping those.
So, what's wrong with this property to make him want to sell it and keep the others?
um... he just wants to focus on the other properties

Dig into truth by asking for it.

The reply above is very valid if the owner is a professional investor. It could also be the other end of the scale. There are a lot of people out there who are trying to be a landlord for the first time. It sounds very sexy until they find themselves in the situation. When they get there, they'll do anything to get out of being in that role.
Being a landlord isn't fun a lot of days. While I was gone on vacation last month, one of my tenants screwed up. She's a single mom with 4 little kids. I've been helping her for the whole time she's been living here.
She moved a known main-liner heroin addict in with her. She says she loves him and he'll die without her help. Yes, I'm in the process of evicting her. I tried and tried to get her to move him out. He went to detox for one day and reappeared. Just like she can't save him, I can't save her. Like I said, my job is no fun some days.

 

[DeletedUser0287]

With you living in the property you would break even if you had a roommate in your side. With that being said the price doesnt matter because the income it produces offsets whatever payment you have and it makes it a good investment due to the cash flow

I read this post again. Is it safe to go in with the mentality of guaranteed of finding a quality tenant? I tend to reference from product based model, where there were zero guarantees of making money.

But in real estate, just the fact that I have property, I can safely guarantee tenants (income)? If that’s the case, my fear is reduced dramatically. Assuming my property isn’t a complete dump, screening requirements aren’t too strong, and competitive pricing.

For everyone else in this thread, is simply owning a property considered a barrier to entry?

The reply above is very valid if the owner is a professional investor. It could also be the other end of the scale. There are a lot of people out there who are trying to be a landlord for the first time. It sounds very sexy until they find themselves in the situation. When they get there, they'll do anything to get out of being in that role.
Being a landlord isn't fun a lot of days. While I was gone on vacation last month, one of my tenants screwed up. She's a single mom with 4 little kids. I've been helping her for the whole time she's been living here.
She moved a known main-liner heroin addict in with her. She says she loves him and he'll die without her help. Yes, I'm in the process of evicting her. I tried and tried to get her to move him out. He went to detox for one day and reappeared. Just like she can't save him, I can't save her. Like I said, my job is no fun some days.

Did you have something in your lease that stated: All people age 18 and above are to be on the lease. If not, on the lease they are an unauthorized occupant. I am still trying to figure out the line between a guest and an unauthorized occupant and having hard evidence for it, instead of just “noticing a new person coming regularly” works out with house hacking. But not sure how I would ever find out, if I wasn’t on property.

 

[WJK]

I read this post again. Is it safe to go in with the mentality of guaranteed of finding a quality tenant? I tend to reference from product based model, where there were zero guarantees of making money.

But in real estate, just the fact that I have property, I can safely guarantee tenants (income)? If that’s the case, my fear is reduced dramatically. Assuming my property isn’t a complete dump, screening requirements aren’t too strong, and competitive pricing.

For everyone else in this thread, is simply owning a property considered a barrier to entry?



Did you have something in your lease that stated: All people age 18 and above are to be on the lease. If not, on the lease they are an unauthorized occupant. I am still trying to figure out the line between a guest and an unauthorized occupant and having hard evidence for it, instead of just “noticing a new person coming regularly” works out with house hacking. But not sure how I would ever find out, if I wasn’t on property.

I put everyone who is 18 or older on my leases, and I don't allow sub-leasing. It also states that guests can only stay for 5 nights. Also, because of our state laws, I can give a 30 notice to any tenant to terminate their tenancy. I run a very tight ship around here. It's a business, not a hobby.

 

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[JM35]

Based on my searches, duplexes were always more money.
I chose Texas because it is a good balance being somewhat metropolitan and lower cost. I don't see many other options. I do want Seattle, LA, San Francisco, New York, but it is near impossible for me to get started there.

I'm in Houston, which is probably the cheapest metropolitan area in all of Texas, and have been looking at doing this for a few months right now but the market is just too inflated right now. Haven't been able to find something that would be cash flow positive with me taking up one of the units that is in a live-able area.

You can find a 4-unit for like $275k if you go out into the shadier suburbs that are outside the loop, but the rents also get so much cheaper out there to the point it still doesn't work from a cash flow perspective. I've also looked in Denver since I'd love to move there, but the market there is 3x more inflated than Houston. Talking $700k for a mediocre duplex in a mediocre area.

If you are looking in the Dallas area, maybe check out Fort Worth. It's a great city, really close to Dallas, and affordable because its not Dallas. I lived with 5 guys in a 6 bedroom there for college and total rent between all of us was $4,250 for a house that had a Zillow estimated value of $275k.....talk about cash flow. I just looked and it's currently up for rent at $4,875 and it was just 1.5yrs ago that I moved out of it.

We'll enter a recessionary period in the next few years and I think the housing market will take a good correction which will result in attractive entry points. What do you do that allows you to live in whichever city you so choose?

 

[biophase]

The only business I am really interested in is real estate, due to its high probability of success. What do you recommend me doing now.

What good is a business if you buy at $250k to get $200 cash flow, if you can buy for $220k next year? Sometimes waiting is the best business decision.

 

[DeletedUser0287]

I'm in Houston, which is probably the cheapest metropolitan area in all of Texas, and have been looking at doing this for a few months right now but the market is just too inflated right now. Haven't been able to find something that would be cash flow positive with me taking up one of the units that is in a live-able area.

You can find a 4-unit for like $275k if you go out into the shadier suburbs that are outside the loop, but the rents also get so much cheaper out there to the point it still doesn't work from a cash flow perspective. I've also looked in Denver since I'd love to move there, but the market there is 3x more inflated than Houston. Talking $700k for a mediocre duplex in a mediocre area.

If you are looking in the Dallas area, maybe check out Fort Worth. It's a great city, really close to Dallas, and affordable because its not Dallas. I lived with 5 guys in a 6 bedroom there for college and total rent between all of us was $4,250 for a house that had a Zillow estimated value of $275k.....talk about cash flow. I just looked and it's currently up for rent at $4,875 and it was just 1.5yrs ago that I moved out of it.

We'll enter a recessionary period in the next few years and I think the housing market will take a good correction which will result in attractive entry points. What do you do that allows you to live in whichever city you so choose?

Thanks for your input. Work in medical field as a contractor.

What good is a business if you buy at $250k to get $200 cash flow, if you can buy for $220k next year? Sometimes waiting is the best business decision.

If the property had negative cash flow, I would still be getting money to put down the mortgage and getting rid of PMI. Cash flow would improve once mortgage is down. Some money is better than none. Let's be real, if it was cash flowing $500 I would still be working my job. By the way I ended up qualifying for 325k loan, but at 5.5% interest. 5.5% seems high.

Another point that is applicable to me is the tax free income I am getting from company. I only qualify, if I have duplicate expenses (aka two rents/mortgage). Rent at the location I am working at counts as #1. Paying my parents rent counts as #2, but I'm not living there. So essentially it is a waste to pay the second expense as rent. Only doing it in case I get audited. I was thinking getting a place so that money is actually being put into an asset.

 

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[biophase]

If the property had negative cash flow, I would still be getting money to put down the mortgage and getting rid of PMI. Cash flow would improve once mortgage is down. Some money is better than none.

Makes absolutely no sense at all.

You buy a property at $250k, put down $20k and owe $230k. Property cash flows $500 a month. After a year you have $6k in your pocket and owe $228k on your loan.

Or you wait a year and property values go down.

You buy the same property at $230k, put down $20k and owe $210k. Property cash flows $500 a month. You now have $0k in your pocket and owe $210k on your loan.

Which scenario is better?

 

[Jamesdoesmith]

Makes absolutely no sense at all.

You buy a property at $250k, put down $20k and owe $230k. Property cash flows $500 a month. After a year you have $6k in your pocket and owe $228k on your loan.

Or you wait a year and property values go down.

You buy the same property at $230k, put down $20k and owe $210k. Property cash flows $500 a month. You now have $0k in your pocket and owe $210k on your loan.

Which scenario is better?

Alright I will jump in here. Full disclaimer I am a realtor, but there are alot of things you aren't considering.

You can buy a single family home and get great tenants who sign a two year lease due to schools. Schools and ISD's are king in the DFW. You can get into a gorgeous home in a super sought after school district for less than 300K. People legitimately move for schools. Especially people from outside the country. Wylie, TX is a great example of this. Close to Dallas, Close to Plano, Close to Richardson. Can get something built in 2012 for 250K or less. It's also growing like crazy out there with top of the line schools.

Your property taxes shift by the city. You need a realtor who has this info at the ready. It can really make an investment or break an investment. Flower Mound is 2.2 I believe while Coppell is 2.8.

Flippers are all over this area who buy at 140 and sell at 200K. I know many personally. The reason for finding them is that they have no heart in the game. It's nothing but numbers to them. Get into a flippers Rolodex.

Your proximity to the DFW airport is huge. You can get top dollar in Coppell, Lewisville, Flower Mound, Roanoke, Keller, Haslet, North Fort Worth. Business people, international citizens you name it. People love being near the airport.

This IS a very soft, normalized market. We are entering the slow season/holiday season. Anyone selling today has a reason. Your agent is partially right. It's not slow, it's "normal". Compared to spring of this year or spring or summer last year it's really slow. You had toyota, state farm, chase, Facebook all moving here. You could list a home near there in Plano/Frisco and have 30 offers 5 cash all at list price or over list price. Hearing realtors bitchin right now is hilarious. It's still one of the hottest, fastest growing places in the country.

This will sound incredibly salesy but now is the time to get pre-approved. After next year you will spend alot of money on the money if that makes sense. Lenders also have some great incentives due to the slow season. Some people are not like us. They still gotta eat.

I wouldn't go after duplexes. It screws up your re-sell and forces you to work with another investor. That being said, you do take on alot of risk buying just a SFH. I think if you find something between 200-250K with 3-4 bedrooms that's been updated/flipped you will be sitting pretty. If it were me I would stay North of PGBT. Your home will appreciate a ton. Especially if you slowly bring it up to speed. Get yourself 3-5 of those and you're in a great position. I am on a team, and we have 2 very established flippers on the team that you could buy some great spots off of. DO NOT BUY A HOME WITH A POOL.

If you want I can email you listings.

 

[Startup Steve]

Find other ways to create revenue or reduce your costs and hold out until the market softens which should happen in the next 12 to 24 months tops. You'll be able to buy lower.

Sent from my SAMSUNG-SM-G930A using Tapatalk

 

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[Envision]

Thanks for your input. Work in medical field as a contractor.



If the property had negative cash flow, I would still be getting money to put down the mortgage and getting rid of PMI. Cash flow would improve once mortgage is down. Some money is better than none. Let's be real, if it was cash flowing $500 I would still be working my job. By the way I ended up qualifying for 325k loan, but at 5.5% interest. 5.5% seems high.

Another point that is applicable to me is the tax free income I am getting from company. I only qualify, if I have duplicate expenses (aka two rents/mortgage). Rent at the location I am working at counts as #1. Paying my parents rent counts as #2, but I'm not living there. So essentially it is a waste to pay the second expense as rent. Only doing it in case I get audited. I was thinking getting a place so that money is actually being put into an asset.

What youre saying here literally doesnt make sense.

That's not how real estate and mortgages work. If you had a property with negative cash flow YOU would be paying down a mortgage for a property that other people live in... Not only that but about 25% would go the principal and the rest of your money would go to the interest. IE you'd be making the bank rich, not yourself.

I dont know what the hell you're talking about in the second paragraph but that shit doesnt make sense either.

Alright I will jump in here. Full disclaimer I am a realtor, but there are alot of things you aren't considering.

You can buy a single family home and get great tenants who sign a two year lease due to schools. Schools and ISD's are king in the DFW. You can get into a gorgeous home in a super sought after school district for less than 300K. People legitimately move for schools. Especially people from outside the country. Wylie, TX is a great example of this. Close to Dallas, Close to Plano, Close to Richardson. Can get something built in 2012 for 250K or less. It's also growing like crazy out there with top of the line schools.

Your property taxes shift by the city. You need a realtor who has this info at the ready. It can really make an investment or break an investment. Flower Mound is 2.2 I believe while Coppell is 2.8.

Flippers are all over this area who buy at 140 and sell at 200K. I know many personally. The reason for finding them is that they have no heart in the game. It's nothing but numbers to them. Get into a flippers Rolodex.

Your proximity to the DFW airport is huge. You can get top dollar in Coppell, Lewisville, Flower Mound, Roanoke, Keller, Haslet, North Fort Worth. Business people, international citizens you name it. People love being near the airport.

This IS a very soft, normalized market. We are entering the slow season/holiday season. Anyone selling today has a reason. Your agent is partially right. It's not slow, it's "normal". Compared to spring of this year or spring or summer last year it's really slow. You had toyota, state farm, chase, Facebook all moving here. You could list a home near there in Plano/Frisco and have 30 offers 5 cash all at list price or over list price. Hearing realtors bitchin right now is hilarious. It's still one of the hottest, fastest growing places in the country.

This will sound incredibly salesy but now is the time to get pre-approved. After next year you will spend alot of money on the money if that makes sense. Lenders also have some great incentives due to the slow season. Some people are not like us. They still gotta eat.

I wouldn't go after duplexes. It screws up your re-sell and forces you to work with another investor. That being said, you do take on alot of risk buying just a SFH. I think if you find something between 200-250K with 3-4 bedrooms that's been updated/flipped you will be sitting pretty. If it were me I would stay North of PGBT. Your home will appreciate a ton. Especially if you slowly bring it up to speed. Get yourself 3-5 of those and you're in a great position. I am on a team, and we have 2 very established flippers on the team that you could buy some great spots off of. DO NOT BUY A HOME WITH A POOL.

If you want I can email you listings.

Remember when I said most realtors are complete morons 2 pages back?

We didnt even have to google an example, the example came to us.

I quoted this so I can specifically point out HOW realtors are morons so you can start to pick up and gauge whose good and whose bad..

First example, sites to authority rather than experience. States that the guy that has plenty of experience with single family home rentals that is making an example for a user isn't considering a lot of things.

Second through tenth example, REALTOR BS TERMINOLOGY
- "gorgeous home"
- Refers to "Best school districts"
- Refers to age of home being newer for only XXXX
- ..."It's Growing Like CRAZY mannnn"
- "You need a realtor who has info at the ready"... wonder where this is going.
- I know flippers
- "people love airports"
- soft market
- slow season
- Anyone selling today has a reason.

...somebody get this man a trophy for this intellectual breakthrough.

-"Youre home will appreciate a ton"

Oh and the best, "This will sound incredibly salesy but now is the time to get pre-approved." and "
If you want I can email you listings."

it's like he did a line of coke and was like F*ck it let me drop some knowledge on this guy that I learned getting my certification.

What did he not do that he should have done if he were a competent realtor?

Not once did he reference:
-Cash flow
-Cash flow
-Cash flow
-That we are in the longest cycle in the past decade and you would literally be buying at the top of the market going back 10 years.
-That interest rates are rising and they are going to level off housing prices as they go up AND increase you're monthly payments
-That multi family would be the way to go considering you're seeking to house hack an investment and you would receive more income and that income would count towards your debt to income ratio

- Not a single reference to the income, investment or process of earning income from the property. Just values, schools, and hot markets.

NOT "I wouldn't go after duplexes. It screws up your re-sell and forces you to work with another investor."

That's literally just factually incorrect and in practice its 100% not true. What does that statement even mean?

I rest my case, I think both of you need to study real estate investing more before you try to do it or try to teach people how to do it.

And James its nothing personal but you literally walked right into it - I probably couldnt have made up a better example. With that being said I have no doubt you're passionate about real estate and you'll do great things in it but you really should know what you're talking about before posting this shit.

 

[DeletedUser0287]

What youre saying here literally doesnt make sense.

That's not how real estate and mortgages work. If you had a property with negative cash flow YOU would be paying down a mortgage for a property that other people live in... Not only that but about 25% would go the principal and the rest of your money would go to the interest. IE you'd be making the bank rich, not yourself.

I dont know what the hell you're talking about in the second paragraph but that sh*t doesnt make sense either.

I am running the numbers if I am living in it. I would not take the deal if both sides were rented out and I was cash flow negative. The reason I have this type of perspective is that even if I do not do rent out part of the place, I still want to eventually buy my own place. Thats what I'm comparing it to with the negative cash flow. If I just buy a place for me to live, well 100% coming out of my pocket for mortgage. With tenants with negative cash flow, I view it as someone helping me pay my mortgage as well. So even though negative cash flow, I wouldn't being paying the whole mortgage on my own. If I was losing $100 a month on this rent out, its better than me paying the entire mortgage.

You said that I would be paying for other people to live in it, but this is house hacking. I am living here too. Another way to view it, is that I am paying $100/month for rent (based on example). Obviously, I want it to cash flow MORE than anything and would rather be making $100/month with me living in it.

I dont know what the hell you're talking about in the second paragraph but that sh*t doesnt make sense either.

Look up traveler tax. Most people have no reason to know about it, unless your job pays stipends.

 

[biophase]

Alright I will jump in here. Full disclaimer I am a realtor, but there are alot of things you aren't considering.

I wouldn't go after duplexes. It screws up your re-sell and forces you to work with another investor.

If it were me I would stay North of PGBT. Your home will appreciate a ton. Especially if you slowly bring it up to speed. Get yourself 3-5 of those and you're in a great position. I am on a team, and we have 2 very established flippers on the team that you could buy some great spots off of. DO NOT BUY A HOME WITH A POOL.

Hi James,

A few questions and concerns, why would a duplex "screw up" your resale? A duplex is a duplex. Makes no sense to me. Why is working with another investor bad?

I don't trust any real estate agent that ever says "Your home will appreciate a ton". How do you even type this as a real estate agent?

If you don't mind answering, how many investment properties to do you own yourself?

 

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[biophase]

I am running the numbers if I am living in it. I would not take the deal if both sides were rented out and I was cash flow negative. The reason I have this type of perspective is that even if I do not do rent out part of the place, I still want to eventually buy my own place. Thats what I'm comparing it to with the negative cash flow. If I just buy a place for me to live, well 100% coming out of my pocket for mortgage. With tenants with negative cash flow, I view it as someone helping me pay my mortgage as well. So even though negative cash flow, I wouldn't being paying the whole mortgage on my own. If I was losing $100 a month on this rent out, its better than me paying the entire mortgage.

You said that I would be paying for other people to live in it, but this is house hacking. I am living here too. Another way to view it, is that I am paying $100/month for rent (based on example). Obviously, I want it to cash flow MORE than anything and would rather be making $100/month with me living in it.

Have you ever calculated how much of your mortgage payment goes to principle in the first 5 years?

 

[Ksalazar]

Why not buy a residential property with 4 units? Focus on just getting into a investment property that makes sense regardless of how the market is as long as you set a strict criteria for finding the correct properties youll be fine. Hustle talk to everyone let them know you are an investor and before you know it youll be finding a deal fair better than you would of if you just stuck to traditional methods. As long as you focus on income based properties and remove the necessary expenses I dont think youll have an issue regardless of the market condition. Seems to be a bit difficult finding a good property at the moment but its possible. Think outside the box.

 

[DeletedUser0287]

Have you ever calculated how much of your mortgage payment goes to principle in the first 5 years?

Not calculated exact amount, but I have looked at amortization tables. The money from tenant helps even if it goes to interest or equity, does it not? If I am using leverage, don't really have a choice with interest?

 

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[biophase]

Not calculated exact amount, but I have looked at amortization tables. The money from tenant helps even if it goes to interest or equity, does it not? If I am using leverage, don't really have a choice with interest?

I was asking merely to show you that you get almost no principle pay down at the beginning, so your desire shouldn't be to get into the game as soon as possible, it should be to buy at a good price. If you knock $5k off the purchase price, that's equivalent to principle pay down for 5 years!

 

[DeletedUser0287]

I was asking merely to show you that you get almost no principle pay down at the beginning, so your desire shouldn't be to get into the game as soon as possible, it should be to buy at a good price. If you knock $5k off the purchase price, that's equivalent to principle pay down for 5 years!

Gotcha!
Would you say the entire US real estate market is essentially the same on holding off, or is it just TX? I will just continue building my landlord systems in the meantime.