All Forum Posts by: Billie Miller

Bringing this back to the issue of druggies and other less financially fortunate people not being able to afford nice housing: the very codes that are supposed to promote providing everyone with "habitable" housing are driving home prices up. This makes it even harder for lower income (including drug dealers and people most of us don't want to rent to) to find affordable housing, and for landlords to provide these people with a livable house at a cost that makes sense.

Point being, that everyone's definition of "safe" is different. I'm willing to bet that if we only had $200 a month to spend on rent, most of us here would pick a house with galvanized plumbing and 14 gauge electrical over copper piping and 12 gauge electrical...it's a hell of a lot better than no house at all.

It would be interesting to do some research on who can provide housing to this group of people for less: the government or private landlords.

Question of code and habitable housing aside of course. Also, was it determined that the OP's new friend's properties weren't up to code? I think that was just assumed...he may have been talking about not fixing holes in the walls or mowing the lawn or something...

Are the existing tenants good renters? I would ask for rent rolls and bank statements. Inherited tenants are risky, but your numbers look pretty good, so even if you have to evict them, it might still be a good deal.

Hi Brock,

It's hard to say without looking at your numbers. Lots of people thing that in order to house hack you have to put in a lot of sweat equity. That's not entirely true. 

It is one of the benefits, but there are many more. I think the best benefit to house hacking is getting to buy a rental with owner occupied financing. It's the cheapest money you can get right now, so it's good to lock in those low rates over 30 years. It's also great if your personal living situation isn't permanent. You can buy a rental and your house at the same time, so to speak.

If the numbers work for you without having to force appreciation, than I would definitely consider it.

However, if all the units are rented out currently, how are you going to house hack it? Are some of the tenants moving out soon?

@Zach Bagby we will be there! 

I would start talking to a CPA sooner rather than later. The tax consequences of house hacking are a lot different than a strict rental property. It can affect some of the decisions you will make with regards to improvements and lots of other things.

@Brandon Hall (The Real Estate CPA) wrote a blog post on this a while back. It's worth the read.

https://www.biggerpockets.com/renewsblog/2016/02/21/tax-implications-house-hacking/

We just had something very similar happen while buying a flip! Verbal commitment so we started the HM loan and were out $600 bucks after he backed out.

This is great! I think a lot of old timers get upset when they see millennials sitting in a coffee shop during the middle of the week on their computers...but most of the time they are working!!! 

Just because you aren't sitting behind a desk for 40+ hours a week doesn't mean you aren't working or being productive!

We only have $600/month in passive cash flow right now, but that's $600 more than any of our friends have, or will have in the near future. We also don't talk about our investing much, because we just get glassy eyes and judgy looks haha.

Keep up the good work!

Welcome to BP! I recently became an agent as well, but have definitely learned more from BP (particularly the podcast) than from RE school.

How did you come to own your rental? Were you looking for a strict rental investment or did you live in it at one point and move out? 

Do you know what a typical cap rate is for your area? That's a good gauge of how your investment stacks up to what everyone else is getting.

The margin seems a little thin for that price point. Every market is different, but I would double check your numbers so you are comfortable with them. 

ROI is something each investor has to decide for himself/herself. We find it more valuable to compare the cap rate of an investment to the market. If that is acceptable, is the profit enough for us justify spending capital on it?