House hacking when you currently rent?

[Ben Stanley]

I'm looking at house hacking a duplex or the like for my first investment property and looking for some advise on timing. I signed a 1 year lease last month so kinda stuck in that until fall 2025 (unless I broke lease or paid massive amounts to cancel it). Not ideal, but was in another country and work is crazy.

Aiming to have solid capital set aside to invest in a first time loan by early next year. 

My question is, should I wait until end of next year to invest, assuming capital and all is aligned by early 2025, or invest in property while simultaneously paying my own rent elsewhere?

[Nathan Gesner]

Quote from @Ben Stanley:

It is cheaper to rent than to pay a mortgage in many markets. Maybe you are better off renting for now while focusing on increasing earnings, saving, and developing a plan.

[Laura Shinkle]

Hey Ben, good question.  A lease for a year while you get settled in a new area and settling down with work is not a bad thing. Its a means to an end, letting you get settled and figure out the area before you purchase. 

In the grand scheme of things, a year is not that long. It'll give you time to save up...the more money you have, the more options you give yourself. I usually tell my clients to start getting preapproved about 4-6 months before you want to move in. That way, you can clear up anything that might be on your credit that you don't know about, maybe increase your credit a bit, and have plenty of time to look before committing to a house. 

I don't think it would be wise to knowingly buy something that you'd be forced to pay both rent and mortgage. Getting a tenant isn't an overnight thing, you may have repairs to make before getting one, so it could be a few months of paying double before you see any income generated from your househack. 

My thoughts: be patient, save up money, put yourself in a great financial position, and then buy. Real estate is not a get rich quick scheme, and one year isn't long in the grand scheme of things. Hope this helps!

[Michael Dumler]

@Ben Stanley, take the time to understand what house hacking means in your market. Sometimes, there are other house hack opportunities to explore and implement than just your classic duplex example. What you can do right now is connect with an investor-focused real estate agent who has house hacked before or is house hacking now and routinely works with other house hack buyers. Come quarter one of next year, start connecting with lenders to determine your budget. In the meantime, take care of the financial basics. Save religiously, improve your credit, and pay off any outstanding debts you may owe. 

What market are you in? 

[Wale Lawal]

@Ben Stanley

Two approaches to investing in real estate are waiting until lease ends in Fall 2025 or investing while paying rent in Early 2025. Waiting allows for maximum savings and house hacking, but may delay entry. Early investing builds equity, generates income, and teaches property management skills, but may strain finances. A hybrid approach involves buying early and renting out units, then moving into one. Balancing cash flow, risk, and long-term goals is crucial.

Good luck!

[Giselle Azcona-Lubbock]

How many bedrooms is your current rental unit ? Are you able to get roommates to help you offset the cost of your rental ? Are you able to sublease ? 

[Tatum Littleton]

As it has been said, I would tend to lean towards continuing to rent. Save as much as you can and be frugal so when the year comes around you are more than ready money wise and knowledge wise to house hack. I wouldn't invest in something just to invest because you feel like you have to, its a marathon, not a sprint so I would recommend being patient and waiting to house hack, but be ready when your lease is up so you can jump on a deal as soon as possible. 

But if you really feel like you need to start now, as @Giselle Azcona-Lubbock said, maybe look into subleasing. 

[Ben Stanley]

Quote from @Giselle Azcona-Lubbock:

How many bedrooms is your current rental unit ? Are you able to get roommates to help you offset the cost of your rental ? Are you able to sublease ? 

Unfortunately no subleasing is allowed here and it is only 1 bedroom.

[Alan Asriants]

I would focus on getting that househack first.

You can take advantage of a lower downpayment, get a roof over your head, and an investment property all in one. With a primary residence you will likely get the best rate too.

I will add that 5% conventional doesn't work as well as 3.5% FHA. Conventional rates with 5% on MF are really high - which is ridiculous IMO.

(You give people a chance to buy a MF with 5% down and then you crush them with the rate...)

Living in your own investment will be a valuable experience as your management is right there, and addressing issues is not as time consuming. Its a great lesson on managing RE. Even if this is the only investment you make, you'll be happy you did so, because buying an investment property not as a primary requires min 20% down. Here you can test the waters with 3.%-5% down, have your own place, and then see if you want to continue investing (chances are you will:))

[Drew Sygit]

@Ben Stanley research, research and when you're tired of it - research some more!

Also, network!

When you are finally ready to buy, you want to be ready and know exactly what you are looking for.

[Jake Andronico]

@Ben Stanley

There's no shame in waiting when you're financially ready. Having to pay a mortgage somewhere and rent somewhere else sounds incredibly stressful. 

With you saying also that "work is crazy", what's the rush?