Advice for house hacking in Upstate NY

[Brandon Persell]

I am looking into purchasing my first property using an FHA Loan and doing a house hack. There are not many multi-family options available in my local area, and the ones that are available are overpriced or the current rent rolls are extremely below market average($200-$400 per unit). Looking for some insight if I should wait to purchase in the hopes of more multifamily properties becoming available in the future, if I should make an extremely low ball offer on what's currently listed. Or lastly how to go about raising the current tenants rent as I take over ownership of the property or maybe some type of vacancy clause before taking ownership. Any advice/insight is greatly appreciated as I am eager to start this process.

[Trevor Naumann]

Quote from @Brandon Persell:

I am looking into purchasing my first property using an FHA Loan and doing a house hack. There are not many multi-family options available in my local area, and the ones that are available are overpriced or the current rent rolls are extremely below market average($200-$400 per unit). Looking for some insight if I should wait to purchase in the hopes of more multifamily properties becoming available in the future, if I should make an extremely low ball offer on what's currently listed. Or lastly how to go about raising the current tenants rent as I take over ownership of the property or maybe some type of vacancy clause before taking ownership. Any advice/insight is greatly appreciated as I am eager to start this process.

What part of NY are you in?

No deal will be perfect. Ultimately you will have to make a deal great if your going to buy at current prices or if a property has been sitting a long time its likely because there is some real work to be done. I think when looking at all of this stuff the two key insights are

1. The biggest benefit of the house hack is defensive and to save money by having low housing payments. The deal that pays all your costs may also come with tons of repairs or problems so its ok to buy a nicer property that will not need a new roof furnace well pump sceptic etc... in the next five years. That said always buy the best deal you can.

2. Its the slowest part of the season for the re market in NY in the early part of the year Jan, feb march. Trust that more inventory is coming. That said time in the market usually heals all wounds. My wealthiest clients are the ones who buy consistently and don't put to much thought into it meaning if the deal works it works and there’s no reason to talk yourself out of buying it. Run the numbers find something that works and get started.

As far as tenants are concerned. read the NY tenants landlord laws as many times as you need to until you understand them. You can raise rents but there will be different lengths of time that you have to provide notice depending on how long the tenant has been living there. Closings with a loan also tend to take two months or so so you may want to put in your offer that notice must be given prior to going to contract. You could also negotiate for the units to be vacant. It just depends on how you want to go about it.

Frankly the most difficult obstacle might be the FHA loan. FHA loans come with an FHA inspection and they are more stringent then a normal inspection. For example peeling paint will cause you to fail the inspection. The FHA product which is meant to make housing more affordable due to these inspections can also bar you from buying an affordable home if that makes sense. Depending on where you are there may be conventional products that still allow you to put as little as 5% down. If you need recommendations DM me.

Hopefully some of this is helpful