House Hacking in 2021

[Ryan Beinner]

I am considering purchasing my first rental property with two partners this summer through an FHA loan and renting it out after one year of residency (House Hacking).

Is now a bad time to try this? Considering a potential market correction, is it likely for my mortgage to go upside down and default?

THX in advance.

[Matthew Brill]

If the deal works the day you buy it then it's a good deal even if the housing market pulls back. You can potentially be under water on the mortgage but if it is a residential mortgage (1-4 unit property) then you can only default if you don't make the payments. So as long as your are cash flow positive you're good. You may not be able to sell without taking a loss but you can wait out the market as long as you want if you can make the payments. It's a different story for commercial loans.

I would be weary about going into a house hack with partners though. Depending on who they are and what the structure of the partnership it.