House hacking by living in basement in Northern Virginia (NoVA)

[Aditya Maini]

I am 26 year old living in NOVA area and will likely stay here for the foreseeable future. I currently pay only $900/mo in rent, but I am considering buying a townhome for $350-400k, living in the basement and renting out the rest of the house for $1800-2100. My total monthly costs will be ~$2600 with mortgage, MIP, taxes, insurances, etc. I would be using a FHA loan as I don't have a large downpayment to put towards the house.

I'd want to stay in this house for a few years, then buy another home with a basement (and live in it), and so on and so forth. My goal is to have several properties first, then prioritize on paying them off in 15 years or so.

Is this a good idea? How can I make this work? 

[Chris Nerio]

@Aditya Maini I think it is a good idea because our area is so expensive. This is what I did and it's been great but it is true our price vs rent ratio here sucks. Not sure how you are getting your total monthly costs but $2600 seems a little high for $350-400k house to me unless something has changed since 2015 when I bought mine, possibly taxes? Anyway, I would buy a property in a neighborhood with no HOA and needs cosmetic work, like fresh paint, cleaned, possibly floor/carpet replacement or just a good carpet cleaning, has good mechanical system (HVAC under 10 years old but Max 10 years old). Also, buy a property where there is enough space in the basement to possibly add another room and one that already has a full bath. FYI a basement with walkout is also a huge plus for home hacking in our area. The small improvements you make will add value to your home. It's not wise to bank on appreciation but at the rate things are going and the fact that we live in a strong appreciation market, in 3 years you could refinance, get out of the FHA and lower your payment. If the appreciation play doesn't work though you should be able to live at a very low cost and save for your next investment, not to mention the equity paydown by your tenants. Like I said, I bought an SFR and did this and it's been life changing. Takes some work but it can be done. I lived in the master bedroom rented all the rest of the rooms including basement out. Lived almost for free, my only costs were utilities.