House Hack Update

[Anthony Swain]

Hey BP gang, 

I wanted to check in to give a house hacking update. Our recent mid-term rental guests moved out and left the place immaculate. *wipes sweat off brow (THANKFUL).

 It was a solid five-month booking, so it was nice not having as frequent turnover with shorter-term rentals. I think "mid-term" rental guests tend to take care of the place a little more since it's a little home away from home. 

We raised our monthly rate slightly and were able to lock in a $2700/month booking to start this month. 

This leaves us with a little over $1000/month for our housing costs split between my wife and I. 

I'm sharing this to encourage others that house hacking is possible even in a growing/desirable city. It can be a great option to subsidize your housing costs, gain appreciation, and benefit from someone else helping to pay down your loan. 

I'd love to hear from other house hackers. What has been the biggest benefit and/or the greatest challenge?

[Benjamin Sulka]

Ant

I love this update!! Glad that your previous tenants left the place in great shape for you. 

Biggest challenge for me has been finding a property that fits my narrow criteria. Had one that we found off-market but things fell through during the inspection (electrical and plumbing issues that we didn't have the capital to pay for and the seller wouldn't budge on). 

Lots of old properties where I'm at, so it isn't unusual to expect $10k+ of capex out of the gate for water heaters, putting in central air possibly, and other old property issues. It has been hard finding a place that
1) Doesn't get bid up by cash buyers that we can't compete with

2) Doesn't have 10's of thousands of capex out the gate

3) Is in an area that I'd grade as C+ or better. Really trying to find something where I'd feel comfortable with the fiance walking the dog at night or just being by herself. 

Love to see you crushing it in your journey. Let's hop on a call soon & touch base!

-Ben

[Anthony Swain]

Hey @Benjamin Sulka !

Happy Fourth!
So far things are moving along well. We actually had some cap ex things come up, but I think if you handle them out of the gate then you don’t need to worry for 15-20 years or more. 

Maybe next inspection, if things come up, then have some contractors give you bids so you can show seller exactly what it may cost. Most buyers will have same issues so it’s a problem they’ll keep running into. 

If you don’t have enough capital for some renovations, then maybe 

A) go for a more turn key place that you can finance for your first property

B) Live in the worse off rental to start and fix basic things yourself.

C) look into FHA 203k loan maybe?

D) Save a bit longer and have more of a cash cushion for renovations

These are just some ideas, but I’m sure there are many ways for you to still make it happen.

Happy to chat again soon Ben
-Ant

[Wale Lawal]

@Anthony Swain

Thanks for sharing your house hacking update. House hacking can reduce housing costs and build wealth by providing tenants and property appreciation. However, challenges include tenant management, privacy, maintenance, vacancies, and financing. Success requires thorough screening, clear boundaries, budgeting, networking, and staying informed about local rental laws, and market trends.

Good luck!

[Anthony Swain]

Good morning Wale,

I hope you had a great holiday!

You're right about the house hacking pros. House hacking is a great way to start your real estate investing journey. You can potential lower housing costs or even stay about the same as renting, while you build wealth through appreciation and loan paydown. Also, it is a great way to learn many real estate skills while maintaining a roof over your head haha. 

The considerations you mentioned are very important points indeed. I actually did a full breakdown with all things considered in a post "REAL House Hacking Numbers". It is essential to factor in percentages for your maintenance, cap ex, vacancy, etc. while analyzing potential investments. 

I do think it is VERY manageable to self-manage, especially with only 1 house hack or even a handful of properties. The property management software that is available makes it all seamless. Screening, applications, credit/background checks, rent payment collections, and maintenance records can be handled with a few clicks.

Thank you @Wale Lawal for always providing some healthy discussions & insight.

Have a great weekend!

[Benjamin Sulka]

Quote from @Anthony Swain:

Hey @Benjamin Sulka !

Happy Fourth!
So far things are moving along well. We actually had some cap ex things come up, but I think if you handle them out of the gate then you don’t need to worry for 15-20 years or more. 

Maybe next inspection, if things come up, then have some contractors give you bids so you can show seller exactly what it may cost. Most buyers will have same issues so it’s a problem they’ll keep running into. 

If you don’t have enough capital for some renovations, then maybe 

A) go for a more turn key place that you can finance for your first property

B) Live in the worse off rental to start and fix basic things yourself.

C) look into FHA 203k loan maybe?

D) Save a bit longer and have more of a cash cushion for renovations

These are just some ideas, but I’m sure there are many ways for you to still make it happen.

Happy to chat again soon Ben
-Ant

Appreciate the insight, man! 

I think going the FHA 203(k) route could definitely be an option for us.

The plan is to live in the worse off unit regardless of what property we end up buying. 

[Mose Gebremeskel]

Love this! We're about to open ours up soon so this is encouraging. 

[Anthony Swain]

@Mose Gebremeskel I'm glad I can give some encouragement. Good luck with it!

Let us know how things go

[Drew Sygit]

Well done!

[Sarita Scherpereel]

That's awesome Anthony. Are you using furnished finder to market your MTR? What's a common place to market that rental in your area?

[Anthony Swain]

Hey Sarita! 

So far FF & Airbnb. All the bookings have came from FF.

I reach out to leads that fit similar request and respond to direct booking inquiries.

Are you doing MTR or STR in Chicago??

[Sarita Scherpereel]

That's awesome. I've really like the guests I've had from Furnished Finder. My unit is licensed for airbnb but since the Holidays (and before) it's mostly been MTR guests.