New investor looking to househack and BRRRR post college

Real Estate Agent · Frederick, MD · Member since 2021 · 18 posts · 21 votes

Hey everyone! I am currently a college student with about 5k to my name. Am planning on moving out to Texas post graduation. Haven't decided on Austin, St.Antonio or Dallas area. My goal is to house hack a SF home and rent out the other rooms. My question is if anyone can tell me the number of capital to have when looking to buy a home to BRRRR as well while house hacking. I just need a number that I want to reach for when working throughout school. May be a stupid question, but when building capital do I need to plan to add the rehab costs onto the 3.5% downpayment I will need? Or will I be able to attach that to the loan I obtain? If anyone has experience or insight on the situation I am in feel free to drop a reply! Thanks for taking the time to read.

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Phong Tran

Real Estate Broker · Portland, OR · Member since 2019 · 22 posts · 26 votes

@Sean McGrady I commend you on having a set plan for your post-graduate! You'll be ahead of the bell curve and ahead of your peers, no doubt. Texas is actually my home state and I can tell you right away that each 3 of those markets that you've mentioned are very different. So the first thing I'd do is figure out which market you want to be in! Aside from price, you should also figure out if the specific city you choose fits your lifestyle. San Antonio is much slower compared to Austin and Dallas. With Austin being crazy ridiculous right now, in terms of price. Once you boil down where you want to go then you can listen to all the great advice that everyone has mentioned in this post.

Good luck!!!

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Alex Roter
Financial Advisor · Los Angeles, CA · Member since 2021 · 141 posts · 58 votes
4y
Hey Sean, you may want to consider a 203(K) Rehab Loan https://www.hud.gov/program_of...
Or you can apply for a Home Equity Line of Credit and use those funds to pay for the rehab costs. I would discuss this with a mortgage broker to see which option makes the most sense for you.
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
4y
@Sean McGrady I would just start househacking and figure it out from there!
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Kayla Givens
Lender · Denver, CO · Member since 2021 · 243 posts · 253 votes
4y
Hey, @Sean McGrady! Congrats on having a plan in place post-graduation - I have said it many times before but I wish I would have started house hacking when I was your age! @Alex Roter has you on the right path with the 203k loan - I would definitely check that out and see if you could that locked up. HELOC would be a great way to go as well but you may have to wait until your loan to value ratios are much higher.
Bottom line, if you don't have a ton of capital, I would focus on saving for your 3.5% down payment and find a home that doesn't need much more than cosmetic fixes. Continue to build your portfolio through house hacking and maybe think about finding a partner to from capital for your BRRRR's. Hope that helps!
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Sean McGrady
OP
Real Estate Agent · Frederick, MD · Member since 2021 · 18 posts · 21 votes
4y
Originally posted by @Alex Roter:
Hey Sean, you may want to consider a 203(K) Rehab Loan https://www.hud.gov/program_of...
Or you can apply for a Home Equity Line of Credit and use those funds to pay for the rehab costs. I would discuss this with a mortgage broker to see which option makes the most sense for you.
Appreciate it! That really does help me.

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Sean McGrady
OP
Real Estate Agent · Frederick, MD · Member since 2021 · 18 posts · 21 votes
4y
Originally posted by @Kayla Givens:
Hey, @Sean McGrady! Congrats on having a plan in place post-graduation - I have said it many times before but I wish I would have started house hacking when I was your age! @Alex Roter has you on the right path with the 203k loan - I would definitely check that out and see if you could that locked up. HELOC would be a great way to go as well but you may have to wait until your loan to value ratios are much higher.
Bottom line, if you don't have a ton of capital, I would focus on saving for your 3.5% down payment and find a home that doesn't need much more than cosmetic fixes. Continue to build your portfolio through house hacking and maybe think about finding a partner to from capital for your BRRRR's. Hope that helps!

Thanks Kayla! Really trying to start out early to achieve financial freedom sooner than later. Thanks for the help!

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Jabbar Adesada
Rental Property Investor · Beaufort, SC · Member since 2020 · 119 posts · 98 votes
4y
@Sean McGrady
Turnkey property you’ll need a down payment + closing cost + furniture and 3-6 months of mortgage payments or the cost of your most expensive capital expenditure
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Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
4y
@Sean McGrady: no one can give you a number, because we don't know anything else besides 3.5% down and you have 5k. 3.5% of a 200k purchase price is $7k, plus several thousand in closing costs, plus some level of reserve capital just to make sure you can fix the furnace when it breaks. So that is $15k. But if you move to Austin and take a job making $30k/yr, you might not qualify based on DTI ratio.
When I bought my first house I had about $40k. That allowed me 20% down on a $158k purchase, plus having reserves in case something went wrong (and it did, as it will for you too).
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Phong Tran
Real Estate Broker · Portland, OR · Member since 2019 · 22 posts · 26 votes
4y
@Sean McGrady I commend you on having a set plan for your post-graduate! You'll be ahead of the bell curve and ahead of your peers, no doubt. Texas is actually my home state and I can tell you right away that each 3 of those markets that you've mentioned are very different. So the first thing I'd do is figure out which market you want to be in! Aside from price, you should also figure out if the specific city you choose fits your lifestyle. San Antonio is much slower compared to Austin and Dallas. With Austin being crazy ridiculous right now, in terms of price. Once you boil down where you want to go then you can listen to all the great advice that everyone has mentioned in this post.
Good luck!!!
2 Reply
Sam Smith
Investor · Texas & Oklahoma · Member since 2020 · 67 posts · 38 votes
4y
@Sean McGrady
With the $5k you might have luck in San Antonio. I live in the DFW market and used to live in Austin, and you likely won't be able to get a place until you've saved up a little more. You'll probably need to be employed for a while to get a mortgage as well. If you'd like some more detail feel free to PM me.
Good luck with it!
0 Reply
Aaron Bihl
Investor · San Antonio, TX · Member since 2017 · 344 posts · 268 votes
4y
If I were you I would buy a place to househack. Then learn how to find your own deals off market. Or switch the order on that, but I believe finding your own deals would be the most critical thing you can learn right now that will help you achieve financial freedom fast.
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