New investor looking for advice- househack property analysis, CPA

[Grace Olinger]

Hello everyone, 

First of all, thank you for all the information that everyone has provided on this forum, it's very helpful for someone like me who is new to real estate investing.

I am a first time homebuyer who only learned about benefits of real estate investment and house hacking within the last two years. I have just taken my first action and got a loan preapproval letter for owner occupied multi family few days ago and was hoping that I could get some advice from people who have been at this position in the past.

1. For house hacking, what would you say are some of the big things to take into consideration when analyzing the property?
2. How have you dealt with tenants that come with the property at the time of purchase?
3. In areas like Greater Boston where it is seller's market, I have heard that it's expected that you do cannot add home inspection contingency, what is the best way to deal with this to make sure that you are not purchasing a property with big issues?
4. What should I look for in a CPA and what kind of fees can I expect to pay? I have always had "easy" tax returns that I could file via Turbo Tax, but since I would like to continue to invest in real estate after the first property and I do not know all the implications of rental income, I was thinking about finding one.
5. (Greater Boston specific) Do you have a CPA that you can recommend to a new investor?

[Ty Ash]

@Grace Olinger

Hi Grace! Very excited to follow your house hacking journey. I also got my start using this strategy almost 4 years ago and still can't believe how beneficial just one investment property can be in accumulating wealth. Here are my thoughts:

1) I'm in agreement with @Danielle Jackson that many first time investors get caught up in the "perfect" house hack where you're living rent free. It's a great goal but the biggest win is offsetting your current housing expenses to accelerate your progress to your next property. Run this analysis as well as how the number will look after you move out. If the numbers are even breakeven post move out when factoring for PITI (principal, interest, taxes, insurance), Maintenance, Capex, Vacancy, and Management you likely have a good investment on your hands.

2) I lean towards trying to select my own residents as soon as possible (which could mean having current long term residents reapply). Knowing the history/employment/credit/background of who is living in your property will improve your chance of success and peace of mind. I also believe there is a lot to be said about "training" your residents from the beginning by setting clear expectations at the lease signing. You might find that the existing long term resident isn't a fan of your rules and procedures and might resist change.

3) As an agent, I avoid removing the inspection contingency if at all possible. We've found that looking at properties with 7+ DOM (days on market) have a higher likelihood of accepting an offer with contingencies. In many cases, these properties have been poorly marketed, bad photography, mis-priced, etc. Otherwise, I have paid to have an inspector walk through a property with me just to be aware of what pitfalls there may be.

4) I'm currently searching for an investor friendly CPA myself. The top factors for me are number of investor clients they have worked with and do they invest in real estate themselves. Expect to pay more than turbo tax (you pay for what you get) but making a mistake on taxes could lead to thousands of dollars of lost deductions.

5) Definitely ask around and start networking. As David Greene always says, "Rockstars know Rockstars".

Best of luck, reach out any time with any questions as you work through your analysis!