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Newbie Seeking Strategy Advice on House Hacking and SFR with Downpayment Assistance
Hey @Alex Jacobs, I'd start by finding a solid investor friendly agent in your local area; definitely meet with a few of them, but ideally you will find someone who has a decent network that can connect you with resources such as a solid lender. Not just a lender who can put together a loan document (they all can do that), but someone who is interested in your goals and can advise you in different strategies, downpayment assistance programs, etc that can get you going.
From there your financial strategy and the local market will begin to steer you in a direction of homes available and that fit your finances. Ideally before you purchase your realtor/lender will provide you with a property management company who is willing to provide resources, leases, and whatever you need to get house hacking. This is the blueprint I have been working with my past/current clients, its simple, boring but can be effective. Good luck!
- Property Manager
- Metro Detroit
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@Alex Jacobs the more bedrooms the more potential income.
DPA programs though, are usually limited to single unit homes.
Building a rental portfolio through house hacking is a terrific idea, particularly if you want to reduce your down payment and increase your income flow. For those who feel comfortable living with roommates or who want to get into real estate investment gradually, house hacking SFR is an excellent alternative since it enables you to start small and live in one unit while renting out the others. Multiple rental apartments under one roof are provided by multifamily buildings, such as duplexes, triplexes, or fourplexes. This can increase rental revenue and accelerate portfolio diversification. They could, however, cost more up front than house hacking a single family home.
Look into local programs in your region, speak with lenders, and utilize internet tools to locate down payment aid programs. Make sure any down payment assistance programs fit your goals and financial position by carefully reading through their qualifying requirements, terms, and conditions.
Good luck!
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Quote from @Alex Jacobs:
I would personally stay away from the downpayment assistance programs as they have many strings attached. If I recall correctly I remember one program here in Houston had a 20-year requirement of you living there and if you move out you pay the loan back.
Use an FHA loan to buy. We recently built a duplex that has 5 beds/5 baths on each side. House Hackers Paradise when it comes to cash flow. I think a duplex is a great way to help you qualify for a loan and allow you to rent out the other unit and still give you privacy. Once you have educated yourself on being a landlord you can turn the additional rooms in your unit into rentals. Banks wont look at your SFR room rental the same way as they would from income from one side of a duplex.
Don't fall for what I call the more doors the cooler you are. Some people brag about the number of doors but cash flow is very little. Renting by the room can make each property a cash cow. What you should focus on is how much money you want to earn from your rentals. Reverse engineer that and you can figure out how many properties you will need to reach that goal.
Best of luck
Hey Alex, welcome to BP! Another option is buying a SFH with an ADU (a garage apt, tiny home in the backyard, etc). I've done two house hacks in Houston. One was was a SFH that was a rent by room and the one I'm in now is a SFH with an ADU. There's pros and cons to both so it depends on what your goals are. If you need any tips I'm more than happy to help!
- Real Estate Agent
- Colorado Springs, CO
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Great questions! @Alex Jacobs
In my opinion, there is NO better way to get started than house hacking.
It requires the least amount of down payment and therefor the least amount of capital at risk.
I would ask around (lenders/realtors) or google "down payment assistance programs in {insert city or state}. In Colorado Springs, we have a program that allows my house hackers to buy a house for $1,000 and the rest is covered with a 0% loan. The income limit is 160k! So most people qualify. See if there is something like that in your area. Then you could buy now before competition becomes crazy again and refinance when rates come down.
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