House Hack vs Live-in Fix & Flip

[Mateo Garza]

Hello, 

I am brand new to REI, I am currently renting an apartment with my brother, in college, and graduate next May. I am hoping to get a head start on my REI journey before I graduate. I have been doing some research in REI and I am thinking between either starting with house hacking or a live-in fix and flip. I have some experience with construction as I have worked in commercial and residential construction a little over a year, so I was thinking of doing a lot of the renovations myself. I don't know if starting with a fix and flip would be too formidable. I have been looking at some areas in the north side and west side of San Antonio.

Does anyone know or have any advice on if a house hack or live-in fix & flip as a first-time strategy would be better, and what would work better for either of these areas in San Antonio?

[Pablo Cuevas]

Hey Mateo, hope you're doing well! REI is great, I went down this exact path, got into REI in college, and I ended up getting a house hack a little under 2 years ago. The property I got is in the medical center, a $260k, 4 bed, 2.5 bath house, newly replaced roof, 20 year old AC, 20 year old water heater, all old appliances basically, high water pressure, and yeah overall outdated house that needed some touchups. I got it at 5.5% interest, monthly mortgage of $2000. I rented out the other 3 bedrooms to my college friends and only paid $200/month toward my mortgage, while they paid the rest. So you will have to consider all these things and their costs, along with any other renovations you will need to make for your potential property, and the prices that go with those as well. I, as a newbie, didn't know much about any of these things until I had already bought the house and there was a lottttt to learn as time went on and things broke, or I discovered things that didn't come up in the inspection, that later needed fixing.

So that being said, it depends on you, and how much risk you are willing to take on. Do you have the capital to take on all these renovations and potentially more? If you do, then go for it, but conduct your due diligence thoroughly, you don't want to get stuck in a flip that you can't afford to rehab, because of bad planning. And if you later on realize it's too risky for you, then a simpler house hack would probably be better to get you started in REI with less risk than a flip.

As to the location, its hard to say which is better to invest in. Both areas can be good, you just have to find the right deal and find out whats best for you. For example, I got my property in the medical center bc its close to UTSA for my tenants, and when they move out I can rent it to travel nurses, UTSA students, or medical students. So if you live in your househack, where do you want to live by? Do you want to live in a nice neighborhood, up and coming neighborhood, bad neighborhood? I would look at both areas everyday on realtor or redfin, check out the houses run numbers on them, and over time you will start leaning more towards an area while also zeroing in on what youre looking to buy. 

There is a lot more that should be said, but I would say figure out your time horizon for buying a property, North or West SA, find what purchase price you can afford, how much you can put towards a rehab, how fast can the rehab be done, and your exit strategy for when it is flipped. Exit strategy being, once flipped, will you continue to live there and rent the other bedrooms out? Take your money out with a refinance and get another property? STR? Sell it? etc

Reach out to me if you have more questions.