Has anyone had a primary residence and also done a house hack?

Question

Good day,

I already have a primary residence and want to house hack. Has anyone done this? I want to get an FHA loan so I will live in it for a year. I am thinking of getting a property near my current home so this can work. I have equity in my current home but I really don't want to take a loan against it. I would rather another funding source. I would love to hear someone's experience if they did this.

Leo R. · Answer

@Cathy P. yes--I have done it many times, and it's the best way for beginning investors to get their start, in my opinion!

Since you already own your own home, you're in a great position to start house hacking (it can be as simple as renting out a room in the house you already own)...plus, since you've bought a property before, and because you've owned your property for a while, you already have some of the home buying and property management experience that will help you as you acquire more properties!

If you feel comfortable doing it, it might be worthwhile to house hack your current home for a bit before buying the 2nd property--this will teach you a lot of things that you can then use to make the 2nd property a house hacking success. For instance, you'll learn about what TYPE of property does, and does not work for your house hacking needs, while also teaching you a lot about your local rental market, tenant selection & management. ...you might discover that you're completely fine with having two tenants at your HH, but three is just too many...or maybe you'll discover that certain floorplan arrangements do (or don't) work for your style of househacking...I can almost guarantee you'll learn SOMETHING that will help make your next property even more of a househacking success!

Plus, since you already own your property and presumably can afford to live there without a tenant, you could do a "trial run" of house hacking with a relatively short lease (maybe just 3 or 6 months)--which would give you an exit if you decide you don't like it, or you end up with the wrong tenant, etc.

You can use an FHA loan, but you don't necessarily have to go FHA (all mine were conventional, NON- FHA 30 yr fixed mortgages).  Find a good mortgage broker and ask them to help you understand your different loan options, and the advantages/disadvantages of each (a good mortgage broker will be happy to help you with that, and can also help you understand why you qualify for certain amounts, and what you'd need to do to qualify for different amounts).

House hack a property every year until you hit your limit of conventional mortgages (usually 10), and you can build up a pretty excellent portfolio of RE in ten years--especially if you do thorough analyses, thorough due diligence, and buy the right properties in the right areas!

Good luck out there!

Nazanin Boojar · Answer

Leo provided great insights.

What you should do is to only think about short-term rentals. You'll see a huge difference in the monthly income and of course the exponential growth of your income in a few years.

Feel free to DM me and ask anything. I'd be more than happy to help you through all these steps.

Galen Ikonomov · Answer

Yeap, work with a broker. UWM has this option for sure, however, I would prefer you put 5% down, because it would be a better rate and less points.

I would not use nowadays FHA loan for a SFR. Rates are too high and adding that PMI on top, no thanks. If it was for Small Multifamily 2-4 units and the rent from the other units are helping for the payment, go for it. If it is Small Multifamily with a conventional you have to put between 20-30% down so FHA would be your only option there unless you have saved money.

You said you have a great credit, FHA loan would not be the best option for SFR for sure.

Galen Ikonomov · Answer

What Allan Smith said. What kind of loan do you have on your current house? If it is an FHA, you must refinance out of it in order to use another FHA. However, there is a better and cheaper way than FHA depending on your credit score. If you have lived in your current house for more than 2 years, you are considered a First Time Home Buyer once again and you can qualify for Conventional loan with 3% down. If it is less than 2 years, it is 5% down. All these are for a Primary residence, meaning you have to live in it.

Allan Smith · Answer

For it to be a house hack you have to live in it.

Scott Allen · Answer

@Cathy P.

Find a solid agent in your area that you like working with/feel comfortable with. Ask them to refer you to their best local lenders that they often use and close with. Get your pre-approval with that lender and send your offer with that agent. Get familiar with the market rents and find a lease that you'll want to use. Best of luck!

Cathy P. · Answer

Thanks Steven!

Steven Foster Wilson · Answer

Hey Cathy, FHA is a great starting point. Talk with local lenders about their first time home buyer programs, some have 0% down, no PMI, etc. House Hacking can allow you to get started with appreciation and cashflow with very little down, you can even BRRRR it like I did if you add value.

Has anyone had a primary residence and also done a house hack?

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