Analyzing a House Hack (First time buyer)

[Tanner King]

Any advice for someone trying to buy their first duplex and house hack? 

I currently have a pre approval and am shopping properties and am stuck on the deal analysis side of things. I want to be able to pull the trigger when a good deal comes a long and be confident in my investment. What are the best ways to analyze a deal, specifically house hacking a duplex?

Any other advice for someone starting out this way would be greatly appreciated.

[Jaycee Greene]

Hey @Tanner King! Are you looking to house hack in SA or a different market? And do you have a price point in mind? Are you looking for something turn-key or something that needs a little "TLC"?

[Tanner King]

Hey @Jaycee Greene! I am looking to house hack in the San Antonio/Boerne area. I am looking to stay in the 250-350 range. I don't have the funds saved up for any major renovations but am looking for something that needs a little TLC. My plan is to do small value add upgrades while I am living in it.  

[Wale Lawal]

@Tanner King

When I analyze a house hack deal, I focus on metrics like GRM, Cap Rate, Cash Flow, House Hack Savings, and Future Rent Potential. Tools like BiggerPockets Calculators and rent estimation tools are incredibly helpful. I always research the local market, compare properties, estimate expenses, and build a reserve fund. Negotiating seller concessions, networking with local investors, and learning property management skills have been key to finding deals with strong long-term potential.

Good luck!

[Alecia Loveless]

@Tanner King If you haven’t already sign up for BPPro membership so you can use their deal analyzing calculators unlimited number of times.

Then spend a LOT of time analyzing deals from the MLS in your preferred location. Like 2-3 a day for the next 60 days.

This is the best way to get good at analyzing deals and will allow you to quickly have a good idea about how a deal will work.

On top of this if at all possible I’d recommend choosing specific neighborhoods to become an expert on as opposed to just thinking “anywhere in the San Antonio market could work”.

I often make the mistake of thinking the grass looks greener on the other side of the fence when going through the forums. Meaning other investors make their market look greener than mine. But then I remember I am an expert in my market and know which areas are better suited to my target goals. Only extended exposure to your preferred market allows you to have this clarity and understanding about a property’s long term potential.

[Drew Sygit]

@Tanner King learn how to work backwards on analyzing a deal, so you figure out the purchase price to offer to make your numbers work.

Too many newbies think they have to offer asking price, which is not the case.

[Gregory Schwartz]

Find the best property you can afford that also can produce enough income so that your monthly out of pocket expense is equal to or less than what you'd pay in rent. Don't over think this, pull the trigger actions create results. 

[Antonio Duarte]

You should look into new construction, A builder like Lennar in Bulverde area. The growth in San Antonio is moving north and the builder incentives will benefit a new investor like yourself. The builder home warranty will help with no out of pocket expenses. Builders are still offering low APR's and paying for all the closing cost. this strategy will keep more money in your savings. Lets connect if you have any questions, I just help a client do this.

[Laura Shinkle]

@Tanner King it's a great question, and one that every investor asks right out of the gate. The tricky part, is everyone analyzes and values one metric over the others. What I mean is, some investors look strictly at cash on cash return, some look at cap rate, others just want to make sure their mortgage is covered. There's no wrong way, as long as it makes sense for YOU. And you actually pull the trigger on something ;)

This is what I would look at: 

1. Find out the inventory of duplexes in your market. Are there a decent amount coming on the market, or is there like 1 a month? If that's the case, maybe look at a different house hacking strategy that might work (like a SFR with an ADU or renting by the room, ie having roommates).

2. If there's enough duplexes that it's likely you find one you like in a reasonable amount of time (less than a year), then start looking at them in your preferred area. How long do they sit on the market, are you finding them in move-in-ready condition, or will they need work before you move in? 

3. Figure out what rent would be in the area. Compare other rentals with a similar size, location and bedroom count to get an estimate of what the rent would be while you're living there. If you're planning on only living there 1-2 years, rent may not change THAT much, so calculate what the rent would likely be right now for your side as well. 

4. Estimate utilities and figure out who pays them (separate meters, landlord paid, etc)

5. You can google or search on BP for definitions of cash on cash, cap rate, etc. Figure out which method makes the most sense for you and look at the numbers for at least 10 deals. Usually a pattern will emerge on a 'normal' deal in your area. Once you know that, you'll be able to spot one that might have a better return than 'normal'. Or maybe one that's move in ready, whereas most of the others need work. Whatever appeals to you more. 

Nobody said it would be easy. This requires doing math, patience and a learning curve. Once you feel like you've gotten the hang of the numbers, start putting offers in that make sense. Someone else mentioned work backwards, ie put an offer in for the price that makes sense. I'd add, talk with your Realtor about what numbers it needs to be at to make sense. If you intend on putting in 50 low ball offers a month, make sure your Realtor knows and is ok with that amount of legwork (because it's a lot). It'll also get grueling for you as well, rejection isn't fun. So talking with your Realtor on scenarios that truly are likely may help you speed up your search and offer process, and help you find a great spot. (that is, assuming you've hired an agent with experience, market knowledge, and the wisdom to be able to guide you to what you're looking for). 

Good luck, hope this helps!

[Addy Chupa]

When house hacking a duplex, start by estimating the total monthly rent you can earn from the unit you’ll rent out. Compare this to your total monthly costs, including mortgage, insurance, taxes, vacancy and maintenance. A good deal is one where the rent covers most or all of your expenses. Tools like Cashflow Analyzer Pro with Deal Instant Analyzer from Asset AFC can help you break this down and understand your potential cash flow and return on investment. Lastly, don’t rush—focus on properties in good locations and with solid potential for both income and appreciation. Good luck! 

[Carlos Valencia]

Hello Tanner, 

That's great to hear you are already pre approved. A few things you need to consider is how much can you realistically rent out each unit once you move out. Its important to know what the max rents will be so that you can cover your mortgage payment and hopefully also cash flow every month. Look for duplexes that are going to need some rehab work so you can add some sweat equity and bring the value up as well. Also pay attention to the lot size and see if you can add one more unit and make it a triplex in the future. Also look at the area as well in terms of how attractive it will be for people to rent out your units. 

@Albert Bui @Matthew Kwan

[JooYung Choi]

Hey Tanner, 

Some analysis I'd recommend:

-Market Rents

-How much renovation is needed to command top $ rents

-Is the home located in an appreciating neighborhood

Househacking is simple! You're just buying a house and renting it out to trusted and quailfied people to help cover the mortgage. If you are up for it, you could consider renting out the bedrooms in your own unit for maximal rents.