• The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success
  1. Join 40,000+ entrepreneurs
    who are kicking butt and
    winning their dream life.

    Unscripted™ Entrepreneurship:
    A Business That Pays More Than Money, It Pays Time.

    "Fastlane" is an entrepreneur discussion forum based on The Unscripted Entrepreneurial Framework (TUNEF) outlined in the two best-selling books by MJ DeMarco (The Millionaire Fastlane and UNSCRIPTED™). From multimillionaires to digital nomads, the forum features real entrepreneurs creating real businesses.

    Download (Unscripted) Download (Millionaire Fastlane)  Register
    Registering for the forum removes this block!

Looking for House Hacking Advice

Discussion in 'General Mindset, Motivation, Beliefs' started by MoreValue, Oct 24, 2018.

  1. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    That is out of my league in terms of capital. Denver looks nice, but much more expensive.

    Really don't think I will get preapproved to be honest with my lack of funds and income even though my credit score is decent. I gotta stay within the 200k range.

    Any word on where Amazon is going to put their new HQ? Maybe I should wait on that announcement.
     
  2. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    Didn't want to start a new thread for this question, but do you all have any restrictions on year the home was built. I chose 1980 limit. Sure, someone can make the house aesthetic, but on an old house it seems like a bandaid effect. Who knows what the internals look like.
     
  3. No Excuses
    Offline

    No Excuses New Contributor

    Messages:
    6
    Likes Received:
    10
    Joined:
    Oct 23, 2017
    Gender:
    Male
    Location:
    USA
    Rep Bank:
    $57
    This house hack strategy (whatever buzz word you want to call it these days - basically getting roommates) can be done in any market. Yes, Denver market is one of the hottest and most expensive markets. His point was that it's totally feasible in even a high cost area. Dallas would be even easier.

    It doesn't need to be a 4 or 5 bed either. Just as long as you have another room to rent out. If you have a garage or RV area to rent out all the better. You could easily fetch $50 - $200/mo for a garage depending on the size, if it's heated, etc.

    My very first house I rented out an extra room I wasn't using for $400/mo. Would be much higher in todays market.
     
    Last edited: Oct 29, 2018
    Kid likes this.
  4. No Excuses
    Offline

    No Excuses New Contributor

    Messages:
    6
    Likes Received:
    10
    Joined:
    Oct 23, 2017
    Gender:
    Male
    Location:
    USA
    Rep Bank:
    $57
    I wouldn't worry about the age of the house as long as it has been updated properly and up to code. Older homes (especially craftsman type) are often more desirable anyway. Worry about the location more than anything. Buy the best home you can afford in at least a B class neighborhood.
     
  5. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    Well of course...the only two properties I am looking at now have an options contract on it...

    Man these duplexes are hard as hell to get.

    I keep holding off on pre-approved from loan because I was reading it lasts only 90 day.s So I would only have 90 days to get a home. So then I would need to get approved again constantly lowering my credit score.

    Interest rates are rising, debating to just buy asap to lock in "lower rates" or wait till prices drop off.
     
    Last edited: Oct 31, 2018
  6. CareCPA
    Online

    CareCPA Gold Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

    Messages:
    481
    Likes Received:
    1,563
    Joined:
    May 2, 2017
    Gender:
    Male
    Location:
    Pennsylvania
    Rep Bank:
    $11,463
    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).
     
    MoreValue likes this.
  7. DustinH
    Offline

    DustinH Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    138
    Likes Received:
    204
    Joined:
    May 24, 2017
    Gender:
    Male
    Location:
    Nashville
    Rep Bank:
    $1,128
    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.
     
    MoreValue likes this.
  8. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    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...
     
  9. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    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.
     
    DustinH likes this.
  10. Envision
    Online

    Envision Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    536
    Likes Received:
    2,808
    Joined:
    May 5, 2014
    Gender:
    Male
    Rep Bank:
    $20,578

    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.
     
    Connor and MoreValue like this.
  11. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    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.
     
  12. biophase
    Offline

    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    5,856
    Likes Received:
    24,802
    Joined:
    Jul 25, 2007
    Location:
    Scottsdale, AZ
    Rep Bank:
    $166,577
    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.
     
    MoreValue and Valor like this.
  13. biophase
    Offline

    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    5,856
    Likes Received:
    24,802
    Joined:
    Jul 25, 2007
    Location:
    Scottsdale, AZ
    Rep Bank:
    $166,577
    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.
     
    Suzanne Bazemore likes this.
  14. Envision
    Online

    Envision Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    536
    Likes Received:
    2,808
    Joined:
    May 5, 2014
    Gender:
    Male
    Rep Bank:
    $20,578
    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.
     
    MoreValue likes this.
  15. exclusives88
    Offline

    exclusives88 Silver Contributor FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    492
    Likes Received:
    785
    Joined:
    May 28, 2014
    Gender:
    Male
    Rep Bank:
    $5,694
    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.
     
    MoreValue likes this.
  16. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    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).

    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.

    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.
     
  17. WJK
    Offline

    WJK Gold Contributor Speedway Pass

    Messages:
    582
    Likes Received:
    1,211
    Joined:
    Oct 9, 2017
    Gender:
    Female
    Location:
    Nikiski, Alaska
    Rep Bank:
    $7,782
    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.
     
  18. DustinH
    Offline

    DustinH Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    138
    Likes Received:
    204
    Joined:
    May 24, 2017
    Gender:
    Male
    Location:
    Nashville
    Rep Bank:
    $1,128
    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.
     
    Andy Black, MoreValue and WJK like this.
  19. WJK
    Offline

    WJK Gold Contributor Speedway Pass

    Messages:
    582
    Likes Received:
    1,211
    Joined:
    Oct 9, 2017
    Gender:
    Female
    Location:
    Nikiski, Alaska
    Rep Bank:
    $7,782
    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.
     
    Kid and MoreValue like this.
  20. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    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.
     
  21. WJK
    Offline

    WJK Gold Contributor Speedway Pass

    Messages:
    582
    Likes Received:
    1,211
    Joined:
    Oct 9, 2017
    Gender:
    Female
    Location:
    Nikiski, Alaska
    Rep Bank:
    $7,782
    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.
     
  22. JM35
    Online

    JM35 Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

    Messages:
    133
    Likes Received:
    217
    Joined:
    Jul 13, 2013
    Gender:
    Male
    Location:
    Houston
    Rep Bank:
    $1,200
    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?
     
    Andy Black likes this.
  23. biophase
    Offline

    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    5,856
    Likes Received:
    24,802
    Joined:
    Jul 25, 2007
    Location:
    Scottsdale, AZ
    Rep Bank:
    $166,577
    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.
     
    Envision and JasonR like this.
  24. MoreValue
    Offline

    MoreValue Contributor

    Messages:
    37
    Likes Received:
    30
    Joined:
    Sep 9, 2018
    Gender:
    Male
    Rep Bank:
    $152
    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.
     
  25. biophase
    Offline

    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    5,856
    Likes Received:
    24,802
    Joined:
    Jul 25, 2007
    Location:
    Scottsdale, AZ
    Rep Bank:
    $166,577
    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?
     
    Sheens and Andrew Jones like this.

Share This Page