What qualities to look for in a house hacking property.

Question

Hello BP, as this is my first post to a BP forum I would like to introduce myself and say that I am an 18 year old kid who has found extreme interest and would love to start house hacking when I graduate from college. With this being said what qualities should I be looking for on a website like Realtor.com or Zillow.com in a property. Thank you so much for any help!

Ben Einspahr · Answer

@Jack Hamm, searching multifamiles is a simple filter on Zillow. But i would not recommend at your age. Will take much longer at your current age to save up for downpayment (unless you already have downpayment assistance). I would recommend 2 options. House hacking a large single family home (4+ beds, 3+ baths) and living in master and renting out the others. Very easy to find those types of homes.The other is a single family home with some form of separate income suite. Like a walk out basement with kitchenette, Mother-in-law guest suite or ADU. Almost like a duplex in the skin of a single family home. I have done that multiple times here in Denver. Happy to DM you more specifics. Let me know!Given your timeline, my next steps would be find yourself a investor friendly agent (familiar with hh'ing) and investment friendly lending. BP is great place to start. Depending on your timeline, might need to have parents co-sign to improve your buying power.

Josh Milewski · Answer

I never house hacked but now that I know about it I wish I had. I said that to say this, take my advice with a grain of salt because obviously I'm on the outside looking in. If I was looking to house hack I would look for a small multi-family property that is still considered residential in the eyes of the bank (so duplex or triplex but I suspect it's a little different everywhere). I would obviously look in areas I'm comfortable living in, that I could afford on my own if I have to kick my tenants out. Alternatively, if you're willing to do a roommate situation you could get a single family home and house hack that way. I'm sure there will be more experienced opinions in this thread soon but until then I hope I gave you some ideas.

Scott Allen · Answer

@Jack Hamm Welcome to BiggerPockets. If you're in the opportunity to house hack while you're in college - do it. House hacking in college example at Ohio State - Buy a 3bd-5bd house, rent the other 2-4 rooms to friends/classmates, rents cover the mortgage plus some and you live for free. Ideally you get a group that wants to live there for at least 3 years so that you move onto another property. House hacking that you can still look into doing now or after college that many people do when they're young - Buy a duplex, live in one side, rent out the other side, do it again a year later.Zillow and Realtor.com - you can filter it to your price range and it'll filter things for you. First thing you should do is meet a solid agent, talk with their lender to get a preapproval, then start writing offers (if you're already working, have a w2 job, co-signer)House hack characteristics that I personally look for - would I actually want to live in the property if I had to/forced to, do I feel comfortable in the neighborhood, can I make it break even/cashflow $200-400 a month when I move out and go onto another one.

Jimmy Bostic · Answer

@Jack Hamm I think it would be wise to look into hacking while in college. Unfortunately some colleges require you to live on campus for x-years, but if where you plan on going doesn't you should consider it. It can be harder to find good deals closer to campus's but it's possible. Plus you'll have your buddies to rent to and a property that'll appreciate in the long-run

Julien Jeannot · Answer

Like everything: it depends, but at the end of the day, its all about the what you can buy and the numbers.

Benjamin Sulka · Answer

@Jack HammWelcome to BP! I'm 22 and looking to pursue the same strategy. I wish I would have learned about real estate investing much sooner. I probably would have approached things much differently Lol. The strategy that I'm going to execute may be one that interests you but the ideas above are great regarding renting to your roommates in college. I imagine it can be a little weird collecting rent from your friends and I know many on BP are strictly against renting to friends so just be careful here. The strategy I am pursuing is getting an FHA loan at 3.5% down (this is most feasible for me because I had to use a bunch of my savings to pay down student loans to lower my debt-to-income ratio) and then buying a duplex.FHA loans have a few implications which may impact you because you are still a youngin and may not have an established credit history or a low enough debt to income. -They require a 580 minimum credit score -Standard debt-to-income ratio for an FHA loan is 43% but this can vary depending on who the lender is. At 43% debt to income if your salary out of college was $50,000 you would have to have $21,500 of debt or less to qualify. This can be a make or break when it comes to student loans. This is what happened to me and it is what is causing me to push back my first investment. -You need to live in the property for at least a year -FHA loans require PMI (private mortgage insurance). PMI is typically 0.5-1.5% of the total loan annually. If you bought a $100,000 property, you'd pay between $500-$1,500 for the year on PMI. Divide that by 12 and you get your monthly payment. Typically any loan with less than 20% down requires PMI to protect the lender from borrowers who stop paying. A few thoughts: -Find an agent and a lender who are investor friendly and familiar with house hacking -Find an area that you can see yourself living in for a year -Consider your debt-to-income ratio-Make sure to include PMI in your calculations as this will impede your monthly cashflowAll that being said, still do your research on all of the things I mentioned. Anyone reading please feel free to let me know if I was off point on anything I said.

Mike Webber · Answer

Multifamily is pretty cut and dry, it would be preferable if the utilities are separately metered. The other option (and what people do in my market) is to purchase a townhouse or SFH with a separate entrance to the basement and rent out one level and live in the other. If this is the route you want to go, the basement needs a separate entrance, full bath, and kitchenette (or ablility to put one in). Separate washer and dryer is a plus, but depending on location may not be a "must have" like the other things.The third option (and my favorite for a young guy) is to buy a TH, SFH or even condo and just rent out the rooms and have roommates. This will bring in the most revenue. You can even furnish it and rent on a short or medium term basis depending on location.

Alecia Loveless · Answer

@Jack Hamm I owned B&Bs for 25 years and house hacked living right alongside my guests the whole time and since then house hack a duplex. My advice is that if you go the route of a SFH try to get one that has bedrooms that are large enough for everyone to have a little space besides just being able to walk around their beds. I owned 2 different B&Bs and both of them had a tiny room where there was just really enough room for a queen sized bed and to move around both sides of it. Most of the time there was always someone who wanted the cheapest small room but I could get twice as much for the larger rooms. Each room that had a private bathroom I could charge even more for. The fewer number of people sharing a bathroom the better, and if you’re in a younger population the girls will likely prefer to share with other girls than with 3 guys if given a choice if it’s shared bathrooms. If you go with an actual multi family read up on some books on best practices for screening tenants.

Sonny Christopher · Answer

My advice would be to look for properties that are outdated but still livable. This way you can renovate and upgrade the place while you live there to not only increase the value of the property but increase your rents.

Matthew Kwan · Answer

HI Jack, it depends what you want or trying to achieve in Real estate. One thing to look for on your first house hack is being able to add more values either it's cosmetic work like paint job/floor job/ adding extra fixtures, or even adding an extra bedrooms. On zillow, you can look around your neighborhoods or competition on what they are charging, so that you'll have a sense on what you must offer in order to achieve the rent that you're targeting. @Albert Bui @Carlos Valencia