Tips for First REI/House Hack Deal

[Austin Powell]

Hello,

I am beginning the hunt for my first property. I've had my ear against the door of REI for a few years now and I'm finally ready (within the next 12 months or so) to dive in. The main goal is of course to omit my personal housing cost each month as I will be returning to college. Its just my dog and I so more than willing to sacrifice the majority of the property to the renters to maximize income. I am extremely handy with a vast collection of tools so can perform improvements myself. Ideally it would be mostly cosmetic and nothing serious as my free time is fairly limited with work/school. That being said, if it makes the deal make sense I'm definitely willing to take this on. Here are the questions I currently have -

1.) Is it best to find a property that is already divided or has a separate unit? Or a small multi family?

2.) What're some major issues people have seen with this process? Permitting, zoning, finance, etc.

3.) Are there any financing options that are favorable to this process and include construction costs?

4.) If going the conversion route, what are some property features to look for?

Location - Jacksonville, FL (unfortunately, no basements!)

Thanks in advance for any advice/tips!

[Rick Albert]

Hey Austin,

These are great questions. Here are my thoughts:

1. It is all about the numbers. For some, it makes sense to rent by the room, others it could be units. Arguably you can structure a single family house like a multifamily, with each room being like a separate unit. Other than that, I have been leaning towards 2-4 units. People pay premiums to rent out full units and you have added privacy and easier to get lending on (lenders will count rental income on other units versus won't typically on bedrooms). It is really just preference.

2. That is really case by case and it would be important to discuss your goals with experienced Realtors and contractors. They can go over your goals and determine what hurdles you might have.

3. I used the FHA 203(k) loan. It is a pain to work with but it got the job done. You put 3.5% down on the purchase price and construction costs. There is also the Home Style renovation loan.

4. I converted our garage into an Accessory Dwelling Unit. I looked for detached and the ability to create privacy. Those were really important to me as well as future tenants.

Good luck!