Non-FHA house hacking benefits?

[Andre Crabb]

Hey all,

As we all know house hacking is a great way to get started in real estate.

I've been wondering though, if you don't use an FHA, what are the benefits? For example, let's assume I live in an area where rents re $1000 / month:

If I buy a duplex that rents for $1000 per unit per month:

• With the house hack, my rent goes to $0/month, I'll get $1000/month for the other unit, and I'll have to pay expenses involved in owning/managing the duplex. Net before expenses is $1000/month.
• If I don't house hack, but stay renting elsewhere: my rent stays $1000/month, I'll get $2000/month for the duplex, and I'll have to pay expenses. Net before expenses is still $1000/month.

This is very simplistic, I know. But I've been trying to justify house hacking, and without using an FHA loan (I'd rather not pay the extra insurance) I'm finding it hard to see the benefits. Any ideas?

Cheers,

André

[Eric Neith]

To get in with little money, the FHA is a 3.5% down loan... but it does carry the PMI for the full length of the loan. Not a bad jump into investing option with the intent of a refi a short time later.