House hacking SFH in Orange County

[Lawrence Ng]

Hi 

I'm a new investor from the Bay Area looking to buy a SFH in Orange county. I was thinking of using the FHA loan to buy the house and rent out the other rooms. Does anyone have any advice or experience house hacking in OC?

[Erik Browning]

Hey @Lawrence Ng typically when folks house hack they are referring to buying a primary residence and renting out the other bedrooms - were you planning on doing that or just buying a SFH in OC and renting out each room while you don't live there? The reason is because these are 2 different financing vehicles.

As a primary residence, you are entitled to the absolute best financing - but you have to live in the property if you were going to use an FHA loan or 3% - 5% down conventional.

If you were planning on just buying a home, not living there and renting out each room, this would require you to put down 20% -25% as an investment property. Additionally, the loan has higher interest rates vs. a primary residence.

Also, as a lender, I advise folks that want to house hack to make sure you have 2 things: Leases for each room and also record your rental income on your taxes (Schedule E). Completing both of these items unlocks other benefits on your future investments.

Good luck!