House Hacking to Jump Start REI

[Ethan Angele]

Hey Everyone, 

Just getting started into real estate and my long term goal is to have rental properties that generate cashflow. My initial plan is to get the extra cash I need for building more reserves and down payments by flipping/wholesaling, which I still want to do in order to speed things up. But I also bought Brandon Turners book (The Book on Rental Property Investing) and the idea of house hacking seems kind of interesting to me. I currently have a single family home (4 bed 21/2 bath) and the first part of the house hacking strategy would be to rent this house out and then go and purchase a multifamily property to live rent free in and therefore save up more cash. My only problem is that the mortgage payment of my current house would only be somewhere around 200 - 300 less then what the average 4 bedroom house rents for.  My question is, are those good enough margins after you calculate additional expenses? 5% repairs, 5% vacancy, etc... 

I'm also looking for input from the Bigger Pockets Community regarding that strategy. Please let me know your thoughts and thanks in advance!

-Ethan

[Brent Coombs]

Originally posted by @Tyrone Hardy:

@Brent Coombs  I am new to the investment game and was hoping you could provide more information on what house hacking is.

Thanks

I believe it's a term invented here at BP by @Brandon Turner, and implies that you would be buying your owner-occupied home for the purpose of renting out a portion of the property that you don't need for yourself (so, usually a duplex or larger), to lessen or eliminate your own expenses of living there, vs what you would otherwise be paying in rent. Good idea! Don't you agree?

House hacking seems particularly useful for FHA-approved LOW DEPOSIT owner-occupied loans, because you can buy up to a four-plex, aimed to 100%+ cover your mortgage repayments! Wow!...