First Purchase / House Hacking. Wait or Buy?

[Sarah Parker]

Hi everyone,

My husband and I are in the same boat. We just moved from NYC to Austin and are looking to buy a place instead of renting. Our plan is to buy a place and live there for 1 year, so we can claim it as our primary residence. But we aren't sure what type of property to target. We want to house hack (rent part of it out while we live there), and then rent the entire place out in a year and buy a new property. But given how expensive the market is right now (and hearing people say that prices will keep dropping) we aren't sure if we should wait a few more months to buy or go ahead and buy now. If we buy now, does a certain type of property make more sense in Austin's current market? We are looking at single family homes, duplexes, fourplex, and condos. We noticed that getting a cash return on for just about any home isn't really possible given prices and interest rates right now. We would love to hear any thoughts! What markers should we really be focusing on to evaluate a potential property in this market? ROI? CAP?

[Rick Albert]

I don't think anyone can guarantee that you will cash flow in one years time. It also comes down to how much you are putting down. In my market (Los Angeles), I tell my clients "if the numbers work at 3.5% down, why wouldn't someone putting 20% down just buy it?"

What's great about buying right now is we have history to learn from. Look at desirable areas and live just outside of it. As people get priced out, they have to go somewhere. Instead of negotiating a price reduction, negotiate the Seller to buy down your interest rate. Deals aren't found, they are made.