House Hacking Realtor

Raleigh, North Carolina
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House Hacking Realtor

Jason Chopin
Raleigh, NC · Member since 2016 · 5 posts · 0 votes

Hello, I'm currently looking to purchase and live in a multifamily property in Raleigh and I'm looking for a Realtor with house hacking/investment property experience. I've also received the following from my loan officer and would prefer someone with experience with conforming loans vs FHA.

You can put as little as 3% down with a conforming loan (a loan backed by Fannie Mae or Freddie Mac). The reason I recommend this for you is:

1.With an FHA loan, you not only have monthly mortgage insurance, but you have an upfront mortgage insurance premium which is rolled into your loan amount which is 1.75% of the loan amount

2.With an FHA loan, your monthly mortgage insurance is the same whether your credit score is 620 or if it's 850. This is good if you have a lower credit score, bad if you have a high credit score as you're subsidizing the lower credit scores monthly mortgage insurance.

3.With a conforming loan, you do NOT have an upfront mortgage insurance premium.

4.With a conforming loan, the mortgage insurance is risk based, meaning the mortgage insurance companies price the mortgage insurance based on your credit score and down payment %. With your mid credit score, I would strongly recommend a conforming loan.

Please send me a direct message if interested! 

Thank you!

Jason Chopin 

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Hannah Smith
Raleigh, NC · Member since 2017 · 80 posts · 46 votes
7y

I would not recommend this strategy in the Triangle. This was my original thought but due to the inflated prices of MF inventory the core financials do not make sense (at least for my strategy...your personal preference my vary). 

Even if you circumvent the capital requirement and put less than 20% down on the property when you exit the investment the property should meet the 1% rule, you shouldn't overpay, etc. etc. 

If you buy a property with a smaller profit margin because you want to house hack in the Triangle and deviate from investment rules of thumb you may run into trouble.

Ex: if you have a vacancy, you have less cash-flow with which to survive on or if the market tanks and you'd like to lower rents to attract tenants, what happens if you're only cash-flowing $100, $200 after expenses? 

This is just my 2 cents from 2 years of watching MF inventory in the Triangle before moving onto other markets. 

I do plan on puchasing a SFH in Raleigh to live in but I'm painfully aware that it will likely be a lifestyle choice, not an investment.

cc: @Caleb Heimsoth

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  • Jiri B.
    Rental Property Investor · Raleigh, NC · Member since 2017 · 157 posts · 169 votes
    7y

    @Jason Chopin that's a great way to start! You will also lock in a good interest for 30 years so can't really beat that.

    By multifamily i'm guessing you are looking for 1-4 units and would live in one?

    What is your price range and what areas are you looking at? Depending on the location, you will be probably looking at 250k+ for duplexes and 400k+ for fourplexes.. 

    0Reply
  • Andrew Kerr
    Rental Property Investor · Everywhere, USA · Member since 2012 · 689 posts · 525 votes
    7y

    @Jason Chopin I am a big fan of house hacking. I am just starting to look for my fourth house hack.

    With doing a house hack in the Raleigh - Durham area, the tough part is going to be finding a multifamily property. They are out there, they just go quick. And you compete with all cash buyers.

    I use @Tiffany Alexy firm Alexy Realty as my agent in the Raleigh Durham area.. She is an investor so she gets it from that side of things. She has several agents that work for her. In addition, she has a property management division as well. 

    1Reply
  • Matthew PorcaroBusiness Member
    Lender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
    7y

    Your Realtor doesn't need as much experience with that, you just let them know your criteria of what you're looking for, and the loan officer does the bulk of the work on the FHA side.

    The 203k Way
    WebsiteView Page
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  • Jonathan Taylor SmithBusiness Member
    Rental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 841 posts · 803 votes
    7y

    Hello @Jason Chopin - There have been some good multi-family properties listed for sale on the MLS recently in the Triangle, but most are higher in asking price than would work well as a straight investment with resulting positive cash-flow. However, your seeking to house-hack changes the calculation greatly in your favor, as your down-payment requirement and interest rate will be much more favorable. Message me if you'd like to discuss.

    Blue Chariot Realty & Management4.915 Reviews
    WebsiteView Page
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  • Hannah Smith
    Raleigh, NC · Member since 2017 · 80 posts · 46 votes
    7y

    I would not recommend this strategy in the Triangle. This was my original thought but due to the inflated prices of MF inventory the core financials do not make sense (at least for my strategy...your personal preference my vary). 

    Even if you circumvent the capital requirement and put less than 20% down on the property when you exit the investment the property should meet the 1% rule, you shouldn't overpay, etc. etc. 

    If you buy a property with a smaller profit margin because you want to house hack in the Triangle and deviate from investment rules of thumb you may run into trouble.

    Ex: if you have a vacancy, you have less cash-flow with which to survive on or if the market tanks and you'd like to lower rents to attract tenants, what happens if you're only cash-flowing $100, $200 after expenses? 

    This is just my 2 cents from 2 years of watching MF inventory in the Triangle before moving onto other markets. 

    I do plan on puchasing a SFH in Raleigh to live in but I'm painfully aware that it will likely be a lifestyle choice, not an investment.

    cc: @Caleb Heimsoth

    3Reply
  • Tiffany Alexy
    Real Estate Broker · Durham, NC · Member since 2014 · 236 posts · 168 votes
    7y
    Originally posted by @Andrew Kerr:

    @Jason Chopin I am a big fan of house hacking. I am just starting to look for my fourth house hack.

    With doing a house hack in the Raleigh - Durham area, the tough part is going to be finding a multifamily property. They are out there, they just go quick. And you compete with all cash buyers.

    I use @Tiffany Alexy firm Alexy Realty as my agent in the Raleigh Durham area.. She is an investor so she gets it from that side of things. She has several agents that work for her. In addition, she has a property management division as well. 

    Thank you Andrew!

    Hey Jason (for some reason couldn't tag you), I'm happy to chat anytime.  I started my investing career by house hacking, but that was back in 2011 when most of the population wasn't trying to buy investment properties.  It can still make sense if you purchase carefully.

    Andrew is right, there is a lack of multifamily inventory here so you would likely overpay.  You don't necessarily have to have a multifamily property to do it though.  You'll have more options if you're willing to think creatively -- a split level home, in law suite, townhome with lower level bed/bath etc.  You probably won't hit anywhere near the 2% rule, or even the 1% rule though you could get close depending on how much extra space there is to rent out.

    Let me know if I can help!

    0Reply
  • Payton Chung
    Developer · DC & NC · Member since 2019 · 113 posts · 95 votes
    7y

    As Tiffany points out, you may need to hack your own house into a multifamily property. There are few such properties in existence, never mind available: only 4% of Wake County residents live in 2-4 unit buildings, according to Census ACS, vs. 60% in detached houses.

    The good news is that some local jurisdictions make this relatively easy. Durham allows detached or attached accessory dwelling units citywide. Cary allows "utility dwelling units" (a second unit within the same structure) town-wide. Both currently limit the second unit to 30% of the primary unit's size, i.e., 23% of the total size of the building.

    Raleigh hasn't gotten on the bandwagon yet, though.

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