Best Areas for Multi-Family House Hacking?

Question

Hey guys..I live in Indiana currently and recently obtained my first investment property that is a short term rental. My wife and I own our own home. We would like to get out of Indiana and live somewhere nice, for a little while at least. We have a kid, and my wife doesn't mind moving around until he starts school. We could sell our home and get approximately $50k in equity out of it. I could also save roughly $15k-$20k with my current job. Where would you choose to get into multi-family units? We'd prefer somewhere where we can get completely different scenery than we can in Indiana. We love being outdoors and hiking. Our ideal states would be Colorado, Utah, Arizona, Washington, North Carolina(potentially). This move would be next year sometime, so right now we're just trying to get ideas on what states/cities you would choose and why. Thank you!!

Steven Foster Wilson · Answer

I know this was not in your list but if you want to grow your portfolio Ohio is the way to go. Because of the affordability, great neighborhoods and schools, and good night life, Columbus has attracted a-lot of businesses to setup shop. The population growth here has been incredible. We also have Hocking Hills which is a great place to hike and be outdoors.

Jody Jubach · Answer

Archie I specialize in short-term rentals in Hocking Hills.

Archie Brady · Answer

Thanks Steven! Coincidentally enough, my wife is from Cleveland. I think she'd eventually like to settle back down in Ohio. Columbus is something we've considered, and would keep us close to our families. We love going to Hocking Hills too, and have thought about getting a rental there. We'd definitely be interested about learning more about that area for investing.

Anthony Taylor · Answer

You definitely can up to a 4 unit. I also know there are loan limits for FHA so that would be a good question for a lender. Happy to put you in touch with a couple great ones if you want to talk through that in more detail!

Archie Brady · Answer

Thanks Anthony! I was actually wondering if you could do a 3% FHA loan on a multi unit property.. I thought you could, but wasn't sure. Would that affect my DTI? Between my wife and I here, I think the most we could spend on a property would be roughly $450k-$500k. So I'm wondering how spending $800k would even be possible for us from the lender's point of view.

Anthony Taylor · Answer

Estes is awesome! I'm only about 45 minutes from Estes Park. For a small multi-family you could house hack in Northern Colorado you're going to be looking at minimum $500k likely. There's a few quadplexes on the market right now in the Loveland market for around $800k. It sounds daunting but certainly doable with 3-5% down with either an FHA or convention owner occupied loan. Would be happy to help you run some numbers when the time comes to see if any options in the area make sense! The Colorado market is known for rapid appreciation but can be challenging (not impossible) to find cash flow. That's why house hacking is popular here for sure. With interest rates as high as they are though, I think now is actually a good time to buy because houses are sitting on the market longer and even seeing price reductions. If people can get in now and continue investing while home prices slow, they can refinance in the future once rates come back down. That's my personal feeling and strategy at the moment at least!

Archie Brady · Answer

Hey Anthony,Thanks for your input! We actually visited Estes Park a month ago and loved Colorado! That's the first time we had been there. We don't necessarily have to be in Estes Park, but just loved the state. Not sure exactly what we could afford, but wouldn't mind looking at 4-6 units either. I don't know if there's any advantages/disadvantages to buying real estate in Colorado, but we're just trying to look at all our options.

Anthony Taylor · Answer

Hey Archie,Hard to go wrong with Colorado if you like the outdoors! We have a bit of everything for sure. And there are certainly opportunities for house hacks all over the state, depending on where you chose to settle down. I'm in the Fort Collins area. In my experience CO doesn't have as many small multi-family properties as the midwest does but they're definitely around. If you ever want more information about CO living let me know!

Archie Brady · Answer

Thanks for your input! My brother in law lives in Seattle, so that may be the only advantage for us. My wife can potentially work remotely from her current job. I would like to go all in on real estate. That's one reason why I'd like to house hack, so that our mortgage can be covered by it and I don't HAVE to have a job right away.

Jared Hottle · Answer

I think the idea of going somewhere new especially if not tied down is an awesome idea. If you are between a bunch of places and not married to one for a job or an experience only that area can give I would recommend looking for some competitive advantage you may have in one area over another. The outlook looks good in alot of areas so is there any place you have established connections already like a contractor or even a friend who could tell you the good areas or bad and maybe help finding recommendations for services.