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Updated over 6 years ago, 08/21/2018

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6
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Brandon Kalp
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6
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House Hacking Strategy To Begin Real Estate Investing

Brandon Kalp
Posted

Hi everyone,

I have always been fascinated with real estate and have finally come across the Rental Property Investing book which has led me to the Bigger Pockets website. I've gone through a lot of the threads and think this is an awesome community so far!

I have done a lot of research on homes in my area lately and think the best strategy for me to get started is buying a duplex to live in one side and rent out the other. I had a couple questions and wanted to get some opinions from people on Bigger Pockets. Any replies will be greatly appreciated. 

I have gone through my numbers for finding my first duplex along with the requirements in the towns I am looking into buying for rental properties. I know a lot of people are saying that home prices keep going up and up and one thing stressed in the book was not rushing in and waiting for a good deal.

So, for a duplex that you are looking into for renting one side and living in the other, would a good deal be having the rent you are getting break even on the mortgage, insurance, and taxes?. Or would you recommend waiting to find a deal where you were making a small profit after mortgage, insurance, and taxes? Any comments would be greatly appreciated, thank you in advance. 

User Stats

196
Posts
130
Votes
Patrick Daniel
  • Rental Property Investor
  • Pensacola, FL
130
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196
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Patrick Daniel
  • Rental Property Investor
  • Pensacola, FL
Replied

It really comes down to what your goal is for the home. If you have a duplex where one side covers the mortgage, then that would mean you are living for free, minus utilities. That will leave that amount more each month for you to save and lead to more investments. 

Be sure you are thinking of your exit strategy when you purchase the home. Do you want to but a flip that you can sell after a couple of years or do you want to hold the duplex for a while? Have you thought about a 4plex that you can rent out 3 units and live in one? You can get residential mortgages on up to 4 units.

Best of luck!

User Stats

89
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33
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Jordan B.
  • Real Estate Agent
  • Long Island NY
33
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89
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Jordan B.
  • Real Estate Agent
  • Long Island NY
Replied

Welcome Brandon!

I too am looking for a house hack as well! For me personally, I run all of my expense numbers (Mortgage, Insurance, Taxes, Vacancy, Cap-EX, Utilities, Repairs, Lawn Care etc...) to see what my final income would be while I live there. It is very hard to find something that you actually make money on after ALL the expenses. So after everything, if I end up paying $200-$400/month then that is a good investment for me. Because this is well below what I would be paying if i just straight up rented. But the biggest thing i then look for is the cash flow i receive after moving out. I look for $150 per door after i move out in net profit each month. I hope that helped a bit.

Jordan

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User Stats

6
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Brandon Kalp
1
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6
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Brandon Kalp
Replied

Thanks Jordan

That's a very good way to think about it. It's probably best to think about how these numbers look after moving out of the home. 

Since you are in fact looking at house hacking also, have you considered FHA loan? I'm curious because I've been calling around looking at different interest rates that come with these, and in some cases I have found that they will give just as good of a interest rate if not better. I see a lot more opportunity to put less money down to have more reserves since this would be my first time getting involved with tenants. I was very surprised that I could get the same interest rate with a lot less money down. Something for you even to think about if you haven't considered.

Thanks again for the reply, hope all goes well for you. 

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6
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1
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Brandon Kalp
1
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6
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Brandon Kalp
Replied
Originally posted by @Patrick Daniel:

 Be sure you are thinking of your exit strategy when you purchase the home. Do you want to but a flip that you can sell after a couple of years or do you want to hold the duplex for a while? Have you thought about a 4plex that you can rent out 3 units and live in one? You can get residential mortgages on up to 4 units.

Best of luck!

 Thanks Patrick,

I have thought about larger units, and I decided I did want to start with a duplex. This is only because it will require less money to start off with and I figure it would be better for my current situation to learn about dealing with tenants. This way I can start with managing 1 unit rather than 3 units. 

Thanks again for the advice!

User Stats

89
Posts
33
Votes
Jordan B.
  • Real Estate Agent
  • Long Island NY
33
Votes |
89
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Jordan B.
  • Real Estate Agent
  • Long Island NY
Replied

@Brandon Kalp Yes I will be using an FHA Loan. Is a great way to get into a property with very low money down and then use the money you will be saving for your next deal. The only downside is the monthly PMI which you are stuck with for the life of the loan. But if the numbers make sense even with that factored in then it doesn't even matter.