Does house jacking really work with families that are trying to establish roots?

Question

Hello community, I often hear house hacking as a strategy for investment, and I can see how it works for someone who is single or a your family without kids. However for someone with young kids looking to lay roots in a community and still have an investing career, how pragmatic is approach? Secondly - wouldn’t the lenders go after you, because you took a loan under premise if primary residence and are now using it as a business income.. isn’t that a risk?

thanks,

Yogesh

Austen Mueller · Answer

It depends on your family and desired lifestyle. There are so many different ways of househacking. It'll all depend on your market, your budget, and your desired life style. Single people have more flexibility for sure. But that doesn't mean you cant enjoy some of the fruits of HouseHacking as a married man with kids.

For instance you don't need to rent by the room. You can buy a large duplex. or if being attached to the tenant is still too close, maybe there is a property with an ADU option. or some sort of in-Law suit. Maybe you live above your business. As for your second question its perfectly legal so long as your living in the property and claiming it as your primary residents. This will allow you to leverage a low down payment FHA loan.

HouseHacking is a great way to get started in real estate. Especially if you never purchased a home, currently rent, or don't have 20% to put down. It'll teach you a lot of the basics of real estate investing without as much risk. Its a great way to get a leg up for a lot of people. This is what's so great about househacking. If that appeals to you I would encourage you to try.

Jared Hottle · Answer

House hacking can be a viable strategy for investment, especially for those who are just starting out. However, it may not be as practical for families with young kids who are looking to settle down in a community and establish roots.

For families, house hacking can be done by purchasing a duplex or a triplex and living in one unit while renting out the other units. This can help offset the mortgage payments and provide additional income. However, it does require a bit more management and maintenance, which may not be ideal for some families.

As for the lenders, it is true that you took a loan under the premise of it being a primary residence, and if you are now using it as a business income property, it could be a risk. However, as long as you are transparent with the lender and follow all legal requirements, it should not be a problem. It is also important to note that lenders have different policies and guidelines, and some may not approve of this type of investment.

Overall, it's important to carefully consider the responsibilities and risks involved before deciding to pursue house hacking as an investment strategy. It may not be the best fit for everyone, and you should consult with financial professionals and real estate experts to determine if it's right for you.

Lawrence Potts · Answer

Hey @Yogesh M sayanakar

Great questions....It really depends on your family dynamics and what you intend to live in. In most cases, it doesn't work out. It can be stressful for a family. Other families make it work.

House hacking can be creative. Maybe the property has a primary home and studio apartment above a detached garage that is preferrable rather than sharing walls? Maybe there's a basement with an exterior entrance that you don't mind renting out? It depends on the deal. It also depends on the family. That's for you and your family to determine.

Now there technically isn't a lender police driving around making sure that you are living in the home you are intending.....but if they are informed that you are not living in a property that you closed on and you never moved into it after 60 days, that could be considered mortgage fraud. It's a risk, and not a wise choice. Sometimes people have to move: being relocated for work (common with military families), having to move for family emergency reasons, etc. If you don't show intent, it is fraudulent. Be honest.

Hope that gives some clarity. House hacking is a great way to build wealth, just ensure that everyone in your family is on board.

Brett Merrill · Answer

House hacking - investing in real estate with the express purpose of living in one of the units - is one of the best strategies for anyone who wants to get started and gain some real estate investing momentum. It can actually be beneficial for those who have a family or kids, as this provides extra motivation to look for your clear-concise-criteria multi-family property, such as a duplex, where the units are side-by-side instead of up-and-down. By having set criteria when investing, such as the layout of a multi-family property, you are in a better position to acquire a quality property that suits both your monetary and practical criteria.  When utilizing the house hacking strategy it is essential to hire the right lender. You don’t want to put yourself in a position where you’re at risk of mortgage fraud, especially when you have a family and kids. Living in the property for the one-year requirement is an option and one that is recommended, however there are sometimes things that allow for this to be null and void such as a major life change including work changes, another pregnancy etc. Please make sure to do you full due diligence on this.

Galen Ikonomov · Answer

No, No and No.

I know plenty of families with kids and animals that are successfully house hacking A HOUSE, not multifamily. Obviously house hacking a Single Family Residence is the "worst case scenario" for some people, so no point of explaining that you can buy a duplex and rent the other side.

And, no, the lender will not go after you, because you are still the Occupying the property as your primary residence. They would go after you for mortgage fraud if you got a loan for an Owner Occupied property and then once you closed, you never intended to occupy the property as your Primary Residence and immediately found a tenant and moved on.

Everything is perspective. If you say that Househacking is good and bad, you are right. It is up to you what stance you are going to take. If you want to figure out how to house hack a house while having a large family, you will find a way and vice versa.

Ryan Thomson · Answer

@Yogesh M sayanakar It absolutely works. If it's your primary and you intend to live there for a year then lender's don't care at all. I would probably get something with a walkout basement, duplex, or house and cottage if I had a family though.

House Hacking is amazing. Here are some resources I found really helpful on my journey.1. For podcasts I really like the Huse Hacking episodes on Bigger Pockets Podcast and other channels. Here is a playlist with the best House Hacking Podcasts I’ve found: https://open.spotify.com/playl...2. Great beginners guide: https://www.biggerpockets.com/...3. The Book on House Hacking Strategies by @Craig Curelop is also a fantastic book4. Happy to talk if you want more advice

Cory J Thornton · Answer

@Yogesh M sayanakar - Since I am not a loan officer, let me just speak to the family house hack.

My wife and I move every 2-3 years. We buy old houses, spend our nights, weekends, and any spare minutes getting them in good shape, then we sell them. We did this the first time we one kiddo, the second time with three kiddos, and now we are in our third project house with four kiddos. I think we will stay in this house longer than our usual 2-3 year target timeframe.

Selling our primary residence has allowed us to take the full value of our earned equity put it into another project, and start buying other rentals. The goal is for this to be our last "live in flip." We are getting to the point where we can start refinancing rental properties and using homes other than the one we live in to keep growing our business.

This approach is a ton of work. It is not easy for kids. It is flexible which helps ... looking back the only thing I may have changed was keeping one of the houses as a long term rental instead of selling them along the way. Every approach has a tradeoff.

If you are going to house hack or live in flip, then just be 100% sure that you and your bride have the same vision for the future. She is going to need to have a passion for the long term goal, otherwise the short term of having a home that is a construction site or living in a duplex could create some tension.

Best of luck with this adventure! My wife and I do not regret a single sacrifice we have made to start building our rental business. It has also been a really great tool to teach our kids the family business from a very young age.

Does house jacking really work with families that are trying to establish roots?

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