New investor assessing the local house hacking market

[Skye Brown]

Hi everyone. I've recently been learning about real estate investing and house hacking, but I want to figure out how viable this strategy is in my area.

I'm 23 years old, living with my parents in a small town in Kentucky (~30k population). I don't plan to live here forever, but I don't have a connection to anywhere else that would prompt me to move. I would love to move out to start building wealth and gaining experience in the space, but I don't know the demand/opportunity for multi-family house hacking in my local area.

How would I analyze my local real estate market to determine if my target strategy will work for me? Any advice is welcome. Thanks.

[Benjamin Aaker]

Hi Skye,
Congratulations on entering the investment game! There are thousands of people on this site who would love to have started at 23. The local market won't dictate whether your strategy will work for you.

You first should determine how much cash you have for a down payment. Since you'll house hack, you should be able to get a place with 3.5% down on an FHA loan. Take your down payment and divide by 0.035 and you'll have your maximum price. Use that to decide whether to go 1 to 4 units. Bigger has more economy of scale and I always recommend a 4 plex for house hacking if you have the funds.
Determine what # units by looking on zillow and finding prices in your area. This will very roughly give you an idea. If you have the money saved to meet the down payment then the strategy has a good probability of working.
Next, you'll need to determine market rent for your area. A real estate agent in the multifamily space will be able to tell you. Learn how to evaluate properties. I recommend reading The Millionaire Real Estate Investor by Gary Keller.
Find a property that works and pull the trigger. Of course, this tiny post won't tell you everything but I hope it gives you a framework.