Duplex House Hack with Partner (Recent College Grads)

[Owen Madigan]

Hello,

I am new to bigger pockets but have been set on owning a duplex for some time now. My best friend from growing up and I are back home (Boston area) from college and want to save up to buy a duplex together and rent out the other side. The plan would be to live in it for a year together then move out and have both sides rented.

We would ideally look to be buying in about a year to 18 months from now, hopefully when rates come down. It's looking like prices are going to be around $1m. Any help/advice on what kind of financing to go for (FHA/conventional/first time home buyer benefits) and any insight on how best to do this with a partner would be greatly appreciated.


Thank you!

-Owen

[John Steffen]

Hey Owen, yes, it's possible for both of you to be on title, split closing costs, etc. Your lender will likely base the loan off just one income/credit though (at least that's how my lenders have done it)

I would personally advise against it - life is a windy road and you never know when one of you may want out of the deal even if both have full intent to stay in from the onset. Instead, I would work together on a side hustle and see how fast you can stack cash so you both can go out and buy multi families. It's only 3.5% down + closing costs and reserves.

Work your day job, mow lawns, leaf cleanup, shovel snow, flip furniture, pick up night shifts waiting tables/bartending, stock shelves at home depot overnight if you hate talking to people or anything else. THIS part would be a blast to do with your buddy. See how fast you can each race to ~50k. Good luck! 

[Rick Albert]

It is all dependent on the numbers.

If you are planning on putting low money down, the odds of it cash flowing (or even breaking even) in the first year would be difficult. 

It would only work if you add a lot of value.

I also wouldn't wait for rates to drop. The problem is everyone else is in the same mentality, therefore if rates drop more, then competition rises, and so do prices (think 2021 but not as intense). 

Versus buying now, and when rates drop, you refinance. That way you also would have a lower loan balance (because each month you have been paying down the loan) and there may be some appreciation. This COULD result in removing your private mortgage insurance.