1st Property Looking to House Hack with college students - Need advice.

[Rolando De la Cruz]

Hey Everyone,

I just graduated college with no debt so I want to buy my first property and House Hack with college students, I found a property currently selling for $175,000 dollars, but I think It can be negotiated to a lower purchase price since it is a little outdated and the other houses in that same street have sold for less money, although it is outdated it could be rented for $550 dollars a month + utilities and since it is a 4 bed, 2 baths; renting out the other 3 bedrooms while I live in one of them would help me break even with the house's monthly expenses. Now if I remodel the kitchen, bathrooms, doors, windows and some other stuff I could probably rent it out for $650-$700, increasing my cash flow, specially when I move out. I am not sure what the ARV would be, specially because the other houses in that street currently have a lower value than what this house is listed for. When it comes to the finances I am planning to get a first time home buyer FHA loan with 3.5% down and when adding the closing fees and all the other fees we are looking around $12,000 dollars out of pocket. My question would be is it recommended to remodel some of the house? if so, is it recommend for me to get a different loan that will cover the remodeling or should I pay that out of pocket, or should I seek for a FHA 203(k) loan?

I played baseball at the college I am trying to rent out so I spoke with the coaches and they will recommend players to live at this house. I understand vacancy can increase during June-July so I will budget accordingly to cover those months. I am planning to keep the property long term. If I missed any important details feel free to ask and let me know your opinion.

Thanks for reading this post!

[Rolando De la Cruz]

Quote from @Jonathan Greene:

You are oversimplifying the difficulty of doing what you say you want to do. In theory, it's a good idea to house hack in general, but I don't understand what you are counting as rent. You are going to rent bedrooms for $550 each? Those numbers would be ok, but do you have money for the downpayment, closing costs, capital expenditures, 15k for reserves?

If you are looking at a house that needs work cosmetically and you have little experience, it is likely the mechanicals are older too and that's where you get killed. You move in, the furnace breaks and you have to pay 8k and you make no money for months.

I understand there is a lot more to think about and thanks for reminding me. The rent would be $550 per bedroom and the utilities would be split in 4 (all the tenants plus me).That was just a surface level analysis for that property and I was wondering If a FHA 203(k) loan would be ideal to cover for the remodeling while keeping in mind the HVAC would need replacement sooner than later. The house was built on 1950 and HVAC units on average last 15 to 25 years, so unless it has been replaced in the last 5 to 10 years it would be something to keep in mind. I estimated the down payment with the closing fees would be around 12k and I could finalize saving that after I start my new job as a Project Engineer for a multifamily construction company next month. I was going to set money aside every month to cover capital expenditures but I will consider having at least 10k in reserves before finalizing my first deal.

My goal is to get my first property before 2024 ends if that same property is still available 3 months from now that would be great, if not I will move on to the next one. I just didn't know how the finances work when remodeling is involve, I have some experience with construction and I could do some of the stuff, but ideally I am hiring someone to do the bathrooms and kitchen.