New and Excited! from Houston, TX

[Diana Chau]

Hey y'all! My name is Diana and I just began getting into the real estate investing scene. I currently have a rental property in Austin, TX and reside in Houston, TX, where I am looking to doing some rehabbing, wholesale, lease-options, etc...

I don't have much experience in the industry, besides a flip house I invested in last year with a partner of mine in San Antonio, TX.

I am an engineer by trade but a future real estate guru by heart - real estate has always been a passion of mine, so what better time to get started than now?

Any recommendations on where to even begin would be greatly appreciated!

If you are another real estate investor, mentor, contractor, lawyer, school teacher, engineer, anything! and am in the Houston area, I would love to talk to you about your experience(s) - what you have seen succeed, what mistake you would never make again, etc...

Thanks y'all!

Diana

[Logan Allec]

@Diana Chau, house hacking is buying a multi-unit rental property (i.e., a duplex, triplex, or fourplex) and living in one of the units such that the income from the other units covers your mortgage. In that way you are “hacking” your biggest expense: housing. You’re basically living for free (and then some) if you buy the right property! You can do this with very little cash up-front: as low as 3.5% down if you get an FHA loan, which is common among house hackers.

In my opinion, if you’re in your 20s and currently unattached to children, house hacking is a no-brainer. If you do nothing else in real estate for the rest of your life, you will have succeeded by getting into a Texas fourplex as a young woman with only 3.5% down. Assuming the rents cover your expenses, in 30 years when you’re in your early 50s and the mortgage is paid off, and you’ve done the smart thing by raising the rents over the years, you will be sitting on a multi-million-dollar asset that cash flows thousands of dollars per month at the cost of a measly $10k or $20k or so out-of-pocket when you were 20-something. I can’t think of any better way for young people with limited resources to prepare for their future so early on in life with so little cash out-of-pocket that they can free up for other investments such as another flip in your case.

One thing to keep in mind when looking for an FHA owner-occupied triplex or fourplex is that 85% of the market rents on all four units need to cover your monthly payment (principal, interest, taxes, insurance, and mortgage insurance). This is known as the self-sufficiency rule. It only applies to 3- and 4-unit properties (not SFRs or duplex) bought using FHA financing. I put together a spreadsheet here to help potential house hackers quickly analyze whether or not a property qualifies. There are other FHA requirements concerning which you should contact your local lender, but determining whether or not a triplex or fourplex meets the self-sufficiency rule is a good place to start as this rule will immediately eliminate many properties from your search, especially in expensive markets like mine.

Good luck and feel free to reach out to me with any questions!