House Hacking a fourplex

[Deonte Palmer]

I am currently about to makes the moves to buy my first fourplex to house hack. I started wholesale and use my acquisition methods to find my property. I have two questions and I thank on advance anybody that gives their perspective and advice.

1) I don’t know if I’m looking from the wrong lens but are you supposed to use the income approach method. Or would I use the comparable method to find the value?

2) how would annalyze a great market I know it’s my first property I only need the 20% equity to be satisfactory for me. So would makes a great investment market?

[Benjamin Aaker]

Hi @Deonte Palmer, banks look at a 4 plex that you will live in as a residential purchase and it can be a great way to put low money down into a property that you can manage while living in it. Valuation is all about what others think the property is worth and on those small multifamilies, the market generally favors the market approach (uses comparable sales to arrive at a value).

In the market today, the values are generally higher than an investor would normally be interested in, but if you are living in one unit it can still be a great investment. As an investor, you also need to use the income approach. That place better generate some cash flow or you won't want to invest in it. It gets muddier if you will live there, because you aren't generating rent, but you are getting the mortgage paid. You should estimate what a tenant would pay for the unit you will be living in when using the income approach.