How to House Hack with a Family

Question

If I had to do it all over again, I would have gotten an FHA loan for a 4plex in the early 2000s instead of buying a SFR with a 95% loan. I thought I was smart because I bought the house expecting to turn it into a rental eventually, which I did. I actually still hold that house as a rental and it cash flows nicely, as well as being worth about double what I paid for it. Not a horrible SFR, but not a 4plex.

Now I am less ignorant about the benefits of House Hacking. I want to find a house to hack, but there is a catch. We now have 4 kids and need a minimum of a 4 bedroom house for us. Our current mortgage payment is almost $3000 and I am tired of it.

I have never seen a 4plex with a 4br/2.5bath unit. Much less one that is affordable. Have you?

The places I have seen with DADUs are too expensive as SFRs for FHA. I went into RE full time this year, so we need to qualify for the new property with my wife's 90k salary...or get seller financing (my preference).

I am counting on the BP universe to come up with some great ideas, and also to hear from other people with large families trying to House Hack.

What should we do?

We can't give the kids back...

Jenn N. · Answer

Hi! I have four kids and we house hack! We started doing it before I ever heard of the term “house hacking”. It just seemed like a good idea to to reduce expenses. Here is our story in brief. We used to live in southern CA. We almost turned our house (back in 2002) into a two unit by putting up a door separating the addition. (It was a decent sized for the area 1750 square foot ranch house.)  The rental would have been a small one bed one bath unit and we would have had a 2 bed one bath unit for our family. The way the house was built it would have worked very well. We only had 2 kids at the time. However we bought an RV and decided to live it in full time for a year that turned into 4 years bc it was such a fun lifestyle! It also taught us we don’t need as much space as we think we do. :-) Our family grew on the road to 4 plus 3 pets!!! We all lived in less than 400 square feet and LOVED it! When we settled down we had fallen in love with living with less and simplicity. So to keep expenses down, we bought a duplex in a fantastic neighborhood. (We did get lucky and we were patient.) Each side was 3 bed 2 bath...a little over 2000 square. It felt HUGE to us after 4 years in the RV. We rented the other side out and that almost paid the mortgage (it would fully cover it now since rents have gone up). Our next move was a SFH with a walk-out basement. We have 4 beds and 3 baths upstairs. We are in the process of converting the basement to a 2 bedroom unit that we will use for a combo of short and corporate rentals. It’s the perfect set up for us. The basement unit should cover the mortgage plus some and we get to live in a fabulous neighborhood with amazing views. It’s a little work managing it but it allows me to homeschool the kids. I consider it my part time job. I’m so incredibly grateful! Again we were patient while looking for the perfect property. Our criteria for this one was: walk out basement, easy access to the unit through a separate unit, no HOA, 4 bedrooms for us, and the ability to FULLY separate it from our place since we have kids and pets. Another idea would be to buy a 4-plex. I’ve seen many with 2 units on top and 2 on bottom each 2 bed 1 bath. In most of these it wouldn’t be too difficult to turn the top floor into one single unit and keep the bottom two units as is. My advice is to be patient, look creatively at each property (also know your local laws but that’s a duh!). So many houses have the potential to be “house hacked” with a little creativity and compromise. Garage apartments, carriage houses, walk out basements, sprawling ranch houses...so many possibilities. Good luck! It totally can be done with a large family! :-)

Chris Mason · Answer

You aren't going to find that. You are going to find a fourplex of 2/1s, and knock down a wall or put a door in. That's what's going to happen, something like that. Or, nothing will happen.

John Warren · Answer

@Ryan Garrison house hacking is a great strategy, but I personally missed the boat kind of like you. I would never try to go back now as I have three kids. It becomes impossible to mix your family and your investment at some point. I focused instead on finding distressed single family homes where I could get a great equity position from day one. This then allowed me to buy apartment buildings, which have been much better pure investments than most house hacks in my area here in Chicago. If I were in your shoes, I would seriously reconsider trying to house hack a multi family and instead find a strategy that complements your current life stage more.

Edgar Martinez · Answer

@Ryan Garrison don’t know if this was suggested and it’s not a perfect solution, but you buy a 4-plex, combine 2 units strategically so you can revert back to a 4-plex if/when you move out.

Jeff White · Answer

@Ryan Garrison Hi Ryan, I doubt you will find many 3-4 plexes that have more than 2 bedrooms per unit. I think the most I've ever seen was a 3/1 for each unit for a 4 plex, but they were counting the basement as a non-conforming bedroom, and it was really small in total square footage for a family.

If you still want to pursue the house hacking strategy, have you thought about a large duplex? I have seen 4/2 units for each side of a duplex. It won't be a perfect cash flowing deal, but it would definitely be something to consider. I'm not sure what the multifamily market is in Olympia, but here in Denver, there are some duplexes that fit that.

You probably won't live for free, but would most likely would cut your living costs in half with renting the other side and living comfortably with your family.

The other option would be to be a large single family house that has a mother-in-law suite attached or the ability to wall off the basement and make it a separate rentable unit, I've found lots of houses like that here that have worked for me.

My current house hack is a 7 bedroom/3 bathroom house, with a 4/2 unit upstairs and a 3/1 unit downstairs that I rent out to a family. I don't have a family myself, but it would work for someone that has a family.

James Carlson · Answer

@Ryan Garrison

I agree with something @Jeff White said. I'd look at finding a home with a lock-off basement or a walk-out basement. May not be the most easy search, but depending on your market (we're in Denver and Colorado Springs), you might be able to find a home with 4br up and some kind of rental space downstairs. Maybe it's got a kitchen, but more than likely it's just a space with a separate unit. Then you Airbnb/short-term rent it or try a medium-term rental for traveling nurses.

Soddee R. Knight · Answer

That's a really great idea @Ryan garrison! Manufactured homes can cash flow really well. One of the great things about real estate investing is that you can make it fit into your life. It's not a one size fits all product.

I'm in the middle of convincing the wife to complete a live in flip while we house hack a 3/2 duplex. Combining strategies to live for free and increase the asset at the same time. I'll remind her that if we do a live in duplex flip and house hack at the same time that her med school student loans and my law school student loans will be eliminated in 2 years or less mathematically.

Ryan Garrison · Answer

@Soddee R. Knight I think finding a place with a DADU or space to put a manufactured home on part of the land may be the way to go.

Most plexes will have no room for the kids and dog to run around, or they may be in neighborhoods my wife would veto.

What do you think you will do?

Soddee R. Knight · Answer

Sounds like a duplex house hack could be easier to find and you'd likely have a higher chance of finding a great deal on it since there are more duplexes out there than quads. A 3/2 duplex could work for your family and eliminate your housing expense. (Hope your children don't mind bunk beds.)

I'm in a similar situation, we're getting tired of paying our $3k mortgage and looking to house hack something. Let us know what you decide.

Adrielle Tecklenburg · Answer

We're trying to do a house hack with kids as well, albeit only two of them. There are properties in our area that have an SFR with one,two,or sometimes three units built in the backyard. Unfortunately all of these SFRs are on the smaller side, around 900-1200 square feet and 2-3 bedrooms. We can make it work,but with 4 kids it would be tough.

One thing I've seen that might work for you is larger properties with multiple homes. I think something like that might be your best bet for finding a larger home/unit with additional rentals.

Best of luck in your search!

How to House Hack with a Family

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