Travel healthcare and house hacking---what would you do?

Question

My fiance (25 F) and I (27 M) currently are traveling healthcare providers.  We have been doing this since I graduated in May of 2018.  We love seeing different parts of the country, that we may not have otherwise been able to visit if we were working regular jobs in one location.  Travel healthcare pays significantly more than a regular job would pay, as they are able to pay per diem money, which is non taxed money.  About 2/3 of our income is not taxed, which allows us to be in the 12% bracket.   If we were to quit travel healthcare, we would take roughly a 30% pay cut.  Long story short, we want to continue to travel for a few years after we get married (June of 2020) in order to pay off my student loans from grad school and to get ahead with investing.

We have a plan of getting started in real estate but are trying to figure out when the best time is for us to get started.  We know that everyone says the best time to get started is now.  We don't want to wait.  Over the past year or so we have talked about doing a house hack, most likely a duplex, for our first home.  We were always going to buy a duplex with 20% down after we were done traveling.

Recently, we began to explore the idea of getting a newish duplex (20-25 years or newer) with an FHA loan before we were finished traveling .  Of course we would use the BP calculator to analyze the deal, etc. Since it's an FHA, we would legally only be able to rent out one unit. We could have our half for when we come home between travel assignments, over the holidays, etc.  It will also give us a place to store our new things that we get from our wedding registry.  After we travel we can either live here for a while or move onto our next step, which may be a live in and flip, keeping the duplex to rent out both sides.

My question: Is it dumb to invest in a property that we can only rent out 1/2 units, while not being able to live in it?  Obviously we would also be paying rent for wherever we are traveling ($500-600/month) as well.  Should I run the numbers on the BP calculator as if we were only going to get half the rent? Is it better to get the duplex earlier rather than later down the road or should we wait until we can occupy half of the house once we are done traveling?

Any input would be greatly appreciated, thanks!

Coltin Steele · Answer

I know I am a little late to the party but we have done somerhing and have used it to travel. Have you thought about doing Airbnb in the other half? I am not exactly sure how that works in terms of legality but gives you flexibility is not long term and could still be legal with your FHA. Can they really tell you not to have friends stay while you are away to make sure pipes don't flood. Having people there occasionally in my opinion is safer than leaving it empty also.

Darren Mesibov · Answer

If you don't need a home base and really want to maximize income, you can buy a multi family building with the 5% down as an owner occupant.  Move into one of the units and rent out the extra bedroom to a roommate (since you won't be there often, it may not make much difference having a house mate).  Then rent out the additional units. As a traveler it might be a good low cost way to build some equity while you're working. You could probably even partner up with someone in your locale who can help manage it while you're out on assignment.

Marissa Nadeau · Answer

We actually did traditional loans for both of them. On the second home there was a unique 30-year loan our local bank was offering where we only had to put 5% down.

Jonathan Steiger · Answer

@Marissa Nadeau

Thanks for the info, I never realized that it was a red flag to go from a single family to multi family home.  We will definitely keep that in mind as we move forward.  Were you able to get an FHA on each of your first two homes?  Or did you have to refinance the first one in order to get the second one as an FHA?

@Bjorn Ahlblad

Great point you have there in getting more doors.  I like your example, however I just wanted to clarify, with an FHA loan we can only get 1-4 doors correct?

@Greg Dickerson

We don't necessarily need a home base, as we currently just use our parents addresses as our permanent addresses.  However, if we wanted to get started with REI using an FHA loan, wouldn't we need to occupy one of the units? But I guess you are right, in that we don't need to get started in REI with a house hack.  I guess we just wanted to get our roots planted with a house hack but we have to make sure the numbers make sense first.

Greg Dickerson · Answer

The question is do you need a home base? If so that does not necessarily need to be a house hack. That may or may not make financial sense depending on the price and cost to maintain.

You could just rent an apartment, condo or duplex unit to have as a home base without the cost of ownership and invest separately in other properties.

You need to run the numbers including the cost of owning the unit you are not renting or using when you travel.

Bjorn Ahlblad · Answer

@Jonathan Steiger Investing is never a wrong time if the investment is sound and makes sense, and aligns with your goals. I would consider more doors if possible. If you buy a duplex and live in one half you are missing half the rent for the investment because you are occupying half. If it is a 10 unit you are only occupying 10% and 90% is rent money! I'm not suggesting don't get the duplex I'm saying don't limit yourself. All the best!

Marissa Nadeau · Answer

@Jonathan Steiger Hey Jonathan! Sounds like you and your fiancé are definitely on the right track! I would highly recommend doing a duplex or triplex for your first deal. My husband and I got married last year and bought a SFH, and then started renting it out when we came across another great SFH deal. But now, if we wanted to invest in a DP or TP, we would have to save up the traditional 20% needed for an investment property, which in our area is a lot. We’ve been advised by a few mortgage agents that it might raise eyebrows if we went from a SFH to a multi-unit, so I would definitely suggest doing it the other way around :)

Travel healthcare and house hacking---what would you do?

Most Popular Reply