House hacking in 2024

[Account Closed]

Hey just wanted to hear of any recent success stories you guys have had with high interest rates and FHA loans in 2024. Also, does anyone know of any good YouTube or podcasts that are putting out new content in 2024 about house hacking and adapting to this market ? Thanks!

[Beth Anderson]

Hi James,

We are looking for our first house hack as well. 2 months ago, I would have been excited to get into any good multi-family with conventional financing, but in the last couple weeks, I have been learning a lot about creative financing options such as seller financing and subject to. I don't believe I would buy even a great deal with conventional financing now. The numbers are just so much better for both me and the seller through creative financing. This might be something you want to look into. I'm currently going through Pace Morby's book and video companion guide from the Bigger Pockets Store. Fantastic resource! 

Blessings on your journey!

Beth

[Daniel McDonald]

house hacking is still a very good option even in this market. However, it really depends on your goals and what you're trying to do to that will morph the strategy for you. I think FHA loans are still popular but if you can swing it the new 5% conventional rules are huge. I'm a 2x house hacked myself and try to put out as much helpful content as I can on IG (@househackandhustle). Always will to chat about my experience!

[Anthony Swain]

Hey @Account Closed, 

On a previous post in the house hacking forums I did a numbers breakdown of my house hack. We actually found it on market and we were able to finance with the 5% Fannie Mae conventional loan. 

I think it depends on your overall goals and definition of success, but our house hack will absolutely help us on our wealth building/investment journey even without it being a homerun. 

It is important to factor in all the benefits of house hacking into your calculations, i.e. amortization, appreciation, income, & potential rent avoidance. All of these factors can lead you well into double digit and even triple digit net-worth returns on investment (NROI). 

FHA can be a great option for financing too, because of the low down payment (3.5%) and potentially more favorable interest rate terms. However, you will have PMI for life of loan most likely and there are usually higher premiums to originate FHA loan. I'd recommend speaking to a referred lender to help you understand all of your options.

@Beth Anderson mentions a great point that creative financing can be a great option. It certainly is for the right property and right terms. However, you will need to find a seller that is willing to do this and it wouldn't be a bad idea to have a professional help guide you through this process.

I will play devil's advocate and mention what kind of properties you may get creatively. I can imagine a juicy well taken care of property would not be up for grabs from another landlord. It will most likely need some level of TLC. Not necessarily a bad thing, but something to consider. 

Keep at it Beth and James! 

[Wale Lawal]

@Account Closed

Even with high interest rates, lots of folks investing or buying homes do well with FHA loans because of small down payments and good loan terms. Success often comes from picking properties with strong chances for rent income or those that can be improved in value. To do well, build a strong money base, keep a good credit score, and look at other loan types besides FHA.

To keep up with house hacking and real estate tips in 2024, check out new videos or shows on YouTube and podcasts that have been helpful before, like BiggerPockets, Meet Kevin, Graham Stephan, Morris Invest, InvestFourMore, The Real Estate Guys, and The Rental Income Podcast. Stay active, keep learning, and get advice from people or pros you trust.

Good luck!

[Paul De Luca]

Quote from @Account Closed:

Hey just wanted to hear of any recent success stories you guys have had with high interest rates and FHA loans in 2024. Also, does anyone know of any good YouTube or podcasts that are putting out new content in 2024 about house hacking and adapting to this market ? Thanks!

 There are definitely success stories in Chicago and around the country. It just depends on your expectations for what looks like a win. Getting cash flow is much more difficult today, especially when putting around 5% down. If you're going to do that and want cash flow, you'll very likely need to at least make some cosmetic improvements to the units to raise the rents and then manage efficiently. And you'll likely want to consider more fringe & cheaper areas for lower prices & better cash flow.

I bought a 3-unit building in November last year when rates were 8% using a renovation loan (5% down), made cosmetic renovations to the units, and then we got way stronger rents than expected. Then I refinanced down to a 6.6% rate but had to pay points but I think it was worth it because it appears rates are going to be higher for longer. 

Many real estate investing content creators like BiggerPockets have shifted to telling people to focus more on appreciation, which is valid but most house hackers I talk to would like some cash flow once they move out or at least break even. Or if you plan on staying in the property for a while, some people aim to just pay less than their current rent.

In a real estate market where housing affordability is a major concern, house hacking actually stands out as an even more valid strategy than ever for buyers. It has gained a lot of interest from millennials and Gen Z in the last few years in particular.

[Jonathan Klemm]

Hi There - We have had several clients make the numbers work here in Chicago typically with either FHA 203k and home style renovation loans.

I continue to remind everyone that a single or walk right now will be a double, triple, or even a home run down the road.  There is less competition now and the saying "Don't wait to buy real estate, buy real estate and wait" ALWAYS holds true!

What area are you looking to househack in?

[Carlos Scarpero]

Well the good news is you can refi when rates go down. 

Keep in mind that your competition is also scared of rates and staying out of the market.