Getting Started: Househacking Strategy

[Wynn Kopriva]

Hi everyone, I’m an engineer in the Houston, TX area looking to purchase my first house/start investing in real estate.

I’ve been researching the different strategies presented here, listening to podcasts, reading books, talking to other investors (mostly people at work with a handful of units).

I currently have about 50k liquid to put into a place and am thinking that the best strategy to start out may be to house hack in order to reduce my current rental expenses, start building equity, and have a SFH to rent out in a couple years after I move on.

My main dilemma is deciding between an inexpensive suburban house in Spring (close to work) where I can put 20% down, vs. a much more expensive house “inside the loop” where I likely put 5% down.

Also, I currently rent a 2BR apartment with a roommate inside the loop, for about 1200/mo each. If I purchase something by the end of the year my company will also pay closing costs (part of a relocation benefit).

Here’s my breakdown of the 2 options:

Suburbs:

My target is an older area proximal to work with a new high school in the good school district (Conroe). 200k or less. There is a lot of new development just south and plenty of room to expand east.

Pros:

Put 20% down

Total monthly pmts not dissimilar to current rents

Give current roommate a great deal (~500/mo) to rent a room (we work at the same company)

Possibly look at getting another roommate (would likely only work if I could find a 3/3 - most are 3/2)

Would likely be a great long-term rental because it’s at the low end of the price range for the good school district.

My commute to work is drastically reduced.

Cons:

Appreciation may be limited by the large developments. (Or the opposite??)

I’m away from the city center for entertainment/friends.

Wouldn’t want to live there long term since my fiancé will work downtown in ~1yr and the non-reverse commute would be terrible.

Inside the Loop:

My target would be close to where I currently live. Property has appreciated drastically in the last 5-10 years and houses are often 300+ per sq ft. Mostly townhomes (bungalos are out of my price range).

Pros:

I could potentially live there for quite a while.

May experience more appreciation (also more downside risk).

Can charge roommates more.

Could potentially Airbnb room(s)

Way more fun of an area

Cons:

Much higher expense obligations & losing money to PMI

Biggest limiting factor for roommates is parking (also we all drive trucks :P)

I have flip-flopped between these two strategies for a little while, and since I’m getting close to crunch time to make a decision, I’m wondering what the community thinks!

Thank you for your reply,

Wynn