My House Hack Journey: Detroit Edition

[Desreal Shorts]

My very first post I told the BiggerPocket’s world that I am buying my first home! I started in January and boy was it a headache; An inattentive Broker coupled with Covid19 and a city wide shutdown can certainly set you back. But I AM BACK BABY and I am ready to GO GO GO!!!!!

So the first thing I did was consult the wonderful folks here at BiggerPockets for some basic education. I was able to figure out my first few steps and decided I would focus on that. 

Step 1: Figure out my goal

For this property, it was pretty simple. I just moved to Detroit and I have become an unwanted guest (though extremely clean and pleasant and willing to pay; I’m basically a landlord’s dream) at one of my Father’s properties. The goal was to move in long enough to purchase a home and get the heck out! 6 months later...here I am! So short term goal: FIND A PLACE TO LIVE!

I decided that I will be doing a House-Hack. I need a place that I can live comfortably while I am in school full-time, that has enough space that I can rent out to others so that they can pay my bills while I live rent free. (A few years ago that statement would have made me cringe, but now I see its a win-win for everyone. They have an affordable place to stay and can likely save money, I’m an awesome roommate with A-1 cooking skills who loves to cook AND BAKE for people, and they do not have to worry about the upkeep on the home since it is my responsibility; Mindset growth!) 

So now I know who I am. I am a new investor looking to do a live-in house-hack. The type of properties I decided to focus on is a single family 3/2, or a duplex.

Now this is where I would have likely went off on a tangent about the different types of loans that I could qualify for or look into. Now, I encourage anyone to do all of those things, but today we will not be taking that deep dive. Today, we are following the steps and staying focused. And what we are focused on is finding a GOOD agent!

I did some calling around, I did some networking, I visited a few office buildings, and I scheduled a few telephone meetings to find a realtor that I felt comfortable with. So what was I looking for?

1) Someone who knew the city well. 

2) Someone who works with investors.

3) Someone who invests themselves. 

Of course other things went into consideration, such as how fast they got back to me. If they followed up when they said they would. I also tried to gage the strength of their network by seeing if they were able to give me leads on things such as lenders and contractors they may have worked positively with in the past. In the end I was able to narrow my choices down and now I get to watch her work her magic, or we soon shall see.

Step 2: Pre-Approval

Now, if you have not done this yet your agent is going to give you some homework. They are going to need to know how much of a house can you afford to buy?

So, I did some calling around, I did some networking, I visited a few office buildings, and I scheduled a few telephone meetings to find a lender that I felt comfortable with. By comfortable I mean, the lender with the best deal and services. 

This can be quite a tedious process if you do not have your finances organized. There are many ways you can start. You can call your own bank and ask to speak with their mortgage lender. You can talk to someone you know who has bought a home and ask for a reference from them. You can even just google it. 

Now there were a few things about this process that concerned me, so I am sure they are concerns for someone else out there. So to start, getting multiple quotes from multiple lenders will not hurt your credit score (I am assuming you have at least an average score. If not there are things you should read before this). You actually have 45 days to comparison shop for mortgages, plenty of time. 

Get a pre-approval letter not a pre-qualification. These are two different things and I will gladly do another discussion post on it, but for now, what you need to know is that a pre-approval letter is your goal. This is what is going to allow you to go shopping. 

When you sit down to talk with the multiple lenders you have found, they are going to ask you a lot of questions. Here’s the silver lining, they’re all going to ask you the same thing. Some can take it a bit deeper, some only scratch the surface, but it all comes down to the same thing; How are your finances? Here is a list of things that you can start to collect that will save you tons of time. I suggest organizing and keeping this in a personal finance file on your computer that you can add to. (If you would like me to do a video tutorial so you can see how I did it, please leave a comment below). 

1) A copy of a valid Driver’s license, Passport, Military ID, Social Security Card; Identification, you get it.

2) Bank statements - (2 months back) for every bank account you have. (Even if you don’t use it, get it and put it in the file)

3) W2s, 1099s (2 years back)

4) Income tax returns (2 years back)

5) Any other statements from any other financial institutions: Retirement accounts, Annuities, TSP, Stocks, Bonds, Cash-Value on a life insurance policy, etc...
 This list is just to get you started and will likely apply to everyone. But situations dictate, which means that some people will have a lot more paperwork than others. I will point out that I am Single, A Military Veteran, Never Married, No kids, with no assets and no debt outside of student loans. I have the simplest finances on earth to keep up with compared to anyone who falls outside of that category. If you have kids, a spouse, a business, have changed your name, filed for bankruptcy, own any assets, etc, that’s probably going to be a little more paperwork. Which is why, if you are a Nube like me,  it is important that you begin organizing the paperwork of your life. A few minutes a week can save you so much more time on the backend, and it gets easier. 

So, This is the current pause point on my Journey. I have reached out to an agent and I have interviewed multiple lenders. I have sent over my paperwork and now I am awaiting the pre-approval letters along with loan options that I have discussed with each of them. It is always nice to have options. 

I will continue to post about my Journey through this process as it continues along. If you have any comments, concerns, or questions, or if I posted any information that may be incorrect, please do not hesitate to let me know as I am still learning and eager to grow. 

Congratulations to you all for beginning the walk on your path to Financial Freedom! WE GOT THIS!!!