WWYD: College Graduate House Hacking

[Ryan Palczynski]

Hey everyone! I'd appreciate any thoughts you would be willing to share on my situation.

I am a recent college graduate (age 23) looking to get my foot in the door of real estate investing through house hacking. Here is my situation:

I have 20k in savings, mostly invested in mutual funds. I have 25k in student loans (much lower than they could have been, as I saved much by working as a Resident Assistant in campus dorms for the past two years, which means free room and board). In June I will be moving to the DC area on a 67k annual salary pre-tax. I am also engaged, planning to be married in May of 2024.

Given my phase in life (young and without kids) I like to think it is an ideal time to begin house hacking. I am pre-approved for an FHA mortgage of 300k, which (with a ~12k down payment) could get me into a 2-bedroom condo in the DC area, where I could live in one bedroom and rent out the other. This is a property that eventually (given 1-year occupancy obligation) my future wife will move into temporarily, until we find another property to house hack after the 1-year obligation. Because of this, I could only offer a 9-month lease to a roommate.

I think to delay purchasing a property would be a missed opportunity, especially because after I am married, a future house hack would need to be a duplex or multi-family (compromising for the comfort of having a separate unit), which in the DC area are much more expensive, and even with two incomes, we may not be able to get approved for a mortgage for that amount.

Should I make the leap and house hack, perhaps spreading myself too thin with little buffer, but securing a property that could later become a cash-flowing rental? Or is it preferable to spend the next year renting, paying off student loans and building savings to purchase a rarer and far more expensive multifamily property, and delaying my RE investing journey?

Thank you for your thoughts!

[Alex Petsopoulos]

Quote from @Ryan Palczynski:

Hey everyone! I'd appreciate any thoughts you would be willing to share on my situation.

I am a recent college graduate (age 23) looking to get my foot in the door of real estate investing through house hacking. Here is my situation:

I have 20k in savings, mostly invested in mutual funds. I have 25k in student loans (much lower than they could have been, as I saved much by working as a Resident Assistant in campus dorms for the past two years, which means free room and board). In June I will be moving to the DC area on a 67k annual salary pre-tax. I am also engaged, planning to be married in May of 2024.

Given my phase in life (young and without kids) I like to think it is an ideal time to begin house hacking. I am pre-approved for an FHA mortgage of 300k, which (with a ~12k down payment) could get me into a 2-bedroom condo in the DC area, where I could live in one bedroom and rent out the other. This is a property that eventually (given 1-year occupancy obligation) my future wife will move into temporarily, until we find another property to house hack after the 1-year obligation. Because of this, I could only offer a 9-month lease to a roommate.

I think to delay purchasing a property would be a missed opportunity, especially because after I am married, a future house hack would need to be a duplex or multi-family (compromising for the comfort of having a separate unit), which in the DC area are much more expensive, and even with two incomes, we may not be able to get approved for a mortgage for that amount.

Should I make the leap and house hack, perhaps spreading myself too thin with little buffer, but securing a property that could later become a cash-flowing rental? Or is it preferable to spend the next year renting, paying off student loans and building savings to purchase a rarer and far more expensive multifamily property, and delaying my RE investing journey?

Thank you for your thoughts!

 Hey Ryan, congrats on the engagement and graduation! Your story reminds me of my wife and I. We graduated, got married, and house hacked in Northern Virginia for the first time last year! Here's our write-up if it's any help to you: https://www.biggerpockets.com/...

I agree with @Joaquin Camarasa (he's a great agent, and helps run our local meetup). Rates aren't great right now, and buying a property that loses money every month if you don't have ample reserves is a risk to consider. One thing I'd add is don't be afraid to take on roommates as a married couple. My wife and I were hesitant at first, but if you buy in an area with a great tenant base, and screen your tenants carefully, the roommates really aren't much of an inconvenience at all. Please let me know if you have any questions, I'd be happy to help as best as I can!