Tips for first investment

[Jared Decker]

Young, college debt, average credit, commission income with small salary, bank account dried up from move to new state. I want to house hack a single family home as my first investment. Any tips, suggestions, examples, ANYTHING to help me learn and follow a model of success would be greatly appreciated!!

[James Hinkle]

Jared, 

I believe you and I are in a similar position. I've been reading The Book on Rental Property Investing by Brandon Turner and in that book he does touch down on "House Hacking" in chapter 3. 

The guidance provided by Mr. Turner is to consider investing in a multi-family home and leveraging programs such as the FHA loan (3.5% down payment if owner-occupied for 1 year) or the United States Department of Agriculture financing (0% down payment in rural areas). I also suggest the VA loan, if you're of veteran status (0% down if owner-occupied). All of these options can help you to overcome the lack of initial investment capital.

On the job training, reduced expenses and being able to closely monitor your investment are a few other benefits mentioned by Mr. Turner. 

The next book in line on my desk is actually The Book on Investing in Real Estate with No and Low Money Down, by Brandon Turner. That particular book might just be full of potential solutions for you. 

You may also want to reconsider your intent to rent out beds/rooms to friends or family. This is a tip that keeps coming up in all of my reading, you need to run your REI company like the business that it is and making clients out of family and friends can heavily complicate that goal.

Aside from that, I would be careful about saying that Cash Flow is not important to you currently. Consider the possibility that one day you'll move out of that unit, perhaps out of the area entirely. At which point you'll need to factor in property management as an expense (10%~ of rent). In this situation, you'll also be spending more on repairs and maintenance as you will not be present to take care of these things yourself. Make calculations based upon how you want the property to perform without you being present or the above mentioned expenses may take a positive cash flow asset and turn it into more of a liability.

Happy Hunting!