First Time House Hacker Plan Feedback

[Noah B.]

Hi Bigger Pockets Community,

I am a first time aspiring house hacker who is looking for advice and for someone to poke holes in my plan before I put it into practice.

My goal is to purchase two house hacks in the next 5 years as well as minimize my housing expenses, learn the ropes of property management, and come out the other side with properties that produce at least $100 cashflow per month.

As a healthcare professional with less than 5 years experience, I qualify for a 0% down 5 year ARM at 3.75% that expires in May 2022 (when I will have more than 5 years experience). I have about $65k in liquid reserves that I can put towards a down payment.

I’m thinking my first step will be to purchase a property in a B-class neighborhood in the Milwaukee area (Wauwatosa or Shorewood to be precise) using the 0% down loan. These duplexes typically run about $350-$450k with property taxes ranging from $6-$10k. Most have been built after 1950 but there are a lot in the Shorewood area (which is the nicer of the two) that were built before 1940. All of them are typically well cared for and feature modest updates.

After 1-2 years of living in this property, I hope to purchase a second house hack with a conventional loan in either a B or C-class neighborhood with emphasis on cash flow. Then, after 1-2 years of living in that property, I hope to return to the first property so that I can refinance at 15% equity and not 25% equity.

Well, what do you think BP? Don’t hold back!

[Alex Briones]

Yes, that sounds a little problematic to me, that you don't meet the 1% rule which should be one of the priorities for long-term buy and hold. Specifically, that you don't meet this requirement in a market like Milwaukee. I would go back to your plan and would seek a cheaper alternative to the 350K-450K price range you are looking for. Let me give you the best advice money can't buy: get the DealCheck app and enter your numbers, and if it meets your objectives, then it's a good deal. If not, move on to the next deal. Never be emotional in your decisions, you must be like Mr. Spock, always logical :)