Doing the Numbers for House Hack

[Jacob Trogan]

So I will include an excel spreadsheet I recently made. It is just going over the numbers of a house I found that I thought would act as a good house hack. It is a SFH but has a separate entrance for the basement. I thought I could live in the basement and purchase the home as owner occupied with 3.5% down. I would then rent out the house up above that is a 4/1. I am thinking to take out a HELOC from the equity in the property to then purchase a second property.

[Don Spafford]

@Jacob Trogan The plan sounds fine. How did you calculate the ARV? Overall, buying like that and living in the smaller or less desirable unit is the way to go to pull out more rent while living there. Keep in mind some banks now are requiring more for this type of property. We got word that Wells Fargo for example for a scenario like this they will require 1 year of reserves and may require at least 1 year of rental experience. I suppose the way around that may be to purchase it vacant and say you intend to live there alone or with family or something. Not that I am implying to lie. But if you have strong reserves and high credit, for a loan this size, they may look over that and you could say you intend to live in the upper and rent out the lower, thereby requiring less reserves possibly. Either way, be sure to talk with some lenders first to get all that figured out ahead of time to be ready to make an offer. Also, at least here in Idaho, nothing has slowed down from Covid-19. All properties, especially in that price range, are receiving multiple offers and usually in the same day they are listed. There is high demand, so be prepared to pay above asking.