Duplex, Househacking

[Katherine Young]

My husband and I recently stumbled upon a duplex (2br, 1b) and (1br, 1b) for 109k. The duplex is in a great area and is currently rented out on both sides (650/550month respectively) with leases ending in Jan. Our plan is to house hack the 2br side for a year. The tricky part of this is that we are a family of four, soon to be, family of five (baby due in Jan). There are quite a few fixes we would want to make on the 2br to make it a nicer space for our family. In the mean time, we are living with my parents and saving money. Questions: 1. Are we crazy? 2. Experiences with duplexes? Pros/cons? 3. Finance options for first time home owners? Repairs/remodeling financing? 4. Experience with Househacking? Thanks!

[Nathan Gogo]

Hi Katherine,

Congratulations on the new addition to your family!  Right off the bat, this looks like it has potential for decent cash flow.  As far as your questions:

1) HA! You're not crazy at all.  What you guys are thinking of is admirable, even!

2) I've been told that it's all what you and your family's tolerance levels are. 5 people in a 2br/1ba will definitely be quite tight. However, like you said, it's a temporary situation. You could also purchase a SFR with the intention of using it as a rental property after short period of time and renting it out after moving.

3) FHA loans will allow you to put as little as 3.5% down on a property. Plus, with an FHA loan you can take advantage of a 203k loan which allows you to bundle repairs on the property you'd like to make into the actual mortgage. So, let's say you'd like to make 10k in repairs. That means the purchase price would be 119k and you could put down 3.5%. That is about $4,200.

4) I have not done house-hacking myself, as of yet. It's well known for being a popular way to get your feet wet with being a landlord and property manager.