Son moving to Twin Cities and looking to House Hack.

[Andrew Hargreave]

Quick introduction: My wife and I just started our REI journey purchasing our first SFM on the South side of Chicago in Dec..so we're very new to this. I've been on BP for about 8 months learning from everyone.

My 23yr old son is graduating from Iowa State in a few months and his church is planting a new church for college kids in Minneapolis this summer and he's going to be helping out with the music program for the startup (unpaid unfortunately).  He has a former roommate who currently lives in the Twin Cities and he's heard me discuss ideas like purchasing either a SFM with 3 to 4 bedrooms and renting rooms out or a duplex and live in one side and rent the other.

My son doesn't have an offered job at this point but there are many likely positions that he could get..and for the last year he's been one of the maintenance guys for a large apartment business that has 3 large apartment complexes around ISU, so he thinks he could at least get a job as a maintenance person somewhere to make ends meet until he lands the full time job.  (his degree is Aerospace Engineering) 

Since he'll need to go the FHA route for his loan to get a low down payment, we're looking for some remote leads on investor friendly lenders and local real estate agents that can help us locate an ideal property for him. He does have 2 confirmed roommates who want live there. He needs to be fairly close to Univ of Minneapolis (say 20 minutes?) since the church group will be meeting on the Univ campus.

We'd like to setup some leads and meetings that we could come visit over the weekends to get started.   I've been scouring Trulia but not sure of the areas that are decent but not overpriced.

He's able to do some of the work like painting and general maintenance but not looking for something that needs extensive work.

Thanks in advance for any leads!

[Sam Stoffels]

Hey Andrew, 

Congrats to your son on the engineering degree and on the desire to "house hack" its a great way to get started. 

I was in your son's shoes just nine months ago. I had just graduated with my Civil Engineering degree and I was looking to buy a duplex in the twin cities and use that as a springboard to get into REI. In concept, the owner occupant duplex idea is a fabulous way to get started in REI. As you already seem aware of there are two ways to house hack. Buy a duplex and rent out the other side or buy a home with multiple bedrooms and rent out the others. I would encourage the later. that is the route that I have taken being in the same situation. The problem with duplexes in the twin cities is they are just either way too expensive, run down, or in a REALLY bad neighbourhood (Trulia's crime map can help find these areas). Many are extremely expensive right now and many I looked at wouldn't even cash flow even if you rented both sides with +20% down. If you go the duplex route be sure to analyze it and make sure its worth it over just an SF. There are duplexes in the MSP area and many are livable but I did not see it as worth it to take on that debt load when I could just achieve the same thing by buying a house and renting rooms out. For that reason, I am closing on a house in an inner suburb this spring after looking at many duplexes since this fall.

Duplex or Single Family, the housing market in the twin cities is extremely hot. In most cases its a seller's market. Especially starter homes under 225K. Homes go quickly and often above asking. It's good your son is handy it seems homes that need some updates get less attention. 

In regards to financing, there are many routes you could go for a low downpayment. Minnesota has many first-time homebuyer programs and they include conventional financing on an owner occupied duplex or SF for 3.0% down. The PMI won't stay forever like FHA. They have down payment assistance too if that is needed.

PM me if you wanna know more about my lender or anything else. 

Best of luck,