Househack Duplex vs. Triplex with FHA loan

[Kelly Coca]

I'm currently looking into investing in real estate and one of my first approaches is househacking. I wanted to know if it's a good idea to initially start off with househacking either a duplex or triplex within the Central/North Jersey area. Someone told me it wouldn't make much sense to Househack with a triplex here in Jersey because my mortgage payment would be too high and I wouldn't get enough monthly cash flow. I'm not sure what to think right now. I would like to know the pros and cons with FHA loans regarding duplexes and triplexes in the NJ area. Thanks to anyone who replies!

[Brandon Rush]

Hey Kelly,

First off, starting out with house hacking is an amazing idea. Many people speak on "living for free" while house hacking, but that will not be the case in many markets, especially the expensive ones. Some things you should focus on instead are:

1) If you house hacked, would your cost of living be the same or cheaper than if you owned a single family or rented?

2) Once you leave your house hack, will it cash flow enough to cover all your debt, capex savings, reserves and repairs? 

If your answer to both of those is yes, then I think it is worth house hacking in your market, even though it is expensive. While you may not see massive cashflow, you will benefit from appreciation and the other benefits of real estate over time as you are probably in a more desirable area. 

As for FHA loans on duplexes vs triplexes, there really is no difference between the two other than the price point and what you are qualified for. FHA loans are a little pricy themselves as they have some upfront fees and mortgage insurance would be added to your monthly payment as well. But, thats not a reason to not utilize an FHA loan. If this is your first home purchase, you should consider a first time homebuyer loan instead which may still offer the same low down payment option as an FHA, but be much cheaper in the long run.

I hope this was helpful to you and reach out if you have any questions.

Good Luck!