Income production in an over priced market

[Danni Catambay]

Hi all,

New investor here looking to house hack a first investment property. I'm in western North Carolina which is a "hip" vacation and arts destination for many. Medium incomes are the low $30Ks, but median home prices are closer to $300k -- so a big disparity in income and home prices. Rents are also pretty high with centrally located one bedrooms going for $1000/mo and immediate suburbs going for around $650/room/month. 

My job is low income so I'm looking for properties that I can mortgage for under $800/mo (could stretch to $1000 if I had solid rental potential, but that's scary), but here's the deal: most properties for sale under $150K need massive structural repair that would kill the 1% rule.

So I'm wondering if anyone else has a good rule or advice for how to evaluate a property for its income generating potential in these circumstances. I'm ok with not hitting the 1% rule if I can house hack my way out of an apartment and generate some extra income. My concern is that with a low paying job, I don't want to cut things too close because then I will never be able to save enough for the next property. 

Thoughts? Advice? Links to relevant blog articles?

Thanks a bunch!

-Danni

[Brent Paul]

Unfortunately you may have to pick up some side hussle with another job.  That's what I did along with not going out to eat and way more ramen noodles than I ever want to eat again.  There are ways to save money if you really look.  Think about how many people go out to lunch every day or have to get that starbucks every morning.  Those things really add up.  I worked 2 full time jobs for almost 2 years to get my finances sorted out.  Did it suck?  Yeah, but I did it because I needed to.  In a world of I can'ts turn that around to I can and this is how I can do this.  You can do this.  I also had an infant during this time.  I still woke up with him every morning, picked him up from daycare, made supper, etc.  

The other mistake I see a ton of people do is charge up their credit cards and buy a brand new car. Don't do that if you don't have to. Keep your cards at a little to no balance. If you have to get a car buy used. If your DTI is too high you won't qualify at all. I was less than 1% from not qualifying for a conventional loan. I had 1k left on my car that I paid off which allowed me to qualify for a 5% down conventional loan.

Properties come and go all the time.  Just concentrate on getting your savings up for a down payment.  Don't sweat the small stuff or you will drive yourself nuts.