Im 20, Should I be Buying BRRR Properties or House Hacking?

[Tyler Heath]

Point being Should I just buy a property and rent it out till I need a room myself then house hack it or should I just wait till I move out to buy a property and House Hack then? Really don't know what I should do because I know I could potentially be losing equity while my money sits in a CD. But I also don't know what COVID is doing with renters or if the market will crash, yada yada yada.

Side Note: I am definitely Able to buy Right Now. I live in Utah and the housing market is pretty High/Competitive so finding the ideal property is pretty hard but doable. 

[Mack Benson]

Hindsight being what it is I wish I would have house hacked 20 years ago when it would have fit into my lifestyle. You say you are able to buy right now, does that mean you are able to put 20-25% down on a rental property or you are able to put 3.5% down on an FHA loan? The reason I ask is because you mention buying a rental property and rent it out until you need a room then house hack. If you buy the property without the intention to live in it (rent it out) then you will need to have the 20-25% down as an investment property. If you are planning on living in it as your primary residence you can use the 3.5% down FHA or a 5% down conventional loan. Last I checked you only need to live in the property for 1 year and you can do it again.

If you have the 20-25% down I would suggest finding a place that you can house hack, even if it's a SFR and you are renting it out by the room. In a year you can do it again with the 3.5-5% down so you could look for a 2-4 unit.

There is always the possibility of a market crash and you never know when we hit the top or bottom until after it happened. You could buy today and the market could go up another 20%, or it could go down 20%. You could choose to wait and not buy today and the market could go up another 20% before you get sick of waiting and buy before the market goes down. Unless you have a crystal ball all you can do is run your numbers conservatively and buy right. What does the deal look like if you have no renters? What does it look like if your rental income decreases 10%? 25%? If the deal looks promising after stress testing then go for it. 

By the sounds of it you are in a comfortable place for your living situation which is good. You can take your time and only buy if the deal suits your criteria. Stick to it and you will be in a great place!