All Forum Posts by: Codey Wendel

So this duplex , are you planning to rent out both sides eventually? If you are then who is actually paying all that interest? If you arnt and your going to live there long term then again.. your other side is paying a very nice chunk of the overall interest. I think its typical to see 95-110% TIP just matters to me who is actually supplying the money to pay that interest . In the end the Equity is mine .. on the path to the end the interest is paid by the tenant imo

ALSO @Codey Wendel- When looking for a good house hack I consider a couple of things.

1. 1. Will it reduce my cost of living when compared to renting?
2. 2. What is my net worth ROI on my down payment and is this better than another investment opportunity.

Your Net Worth ROI calculation takes into account the appreciation, loan paydown, tax benefits, and the rent avoidance (the difference in what you pay towards your mortgage compared to your rental situation). The total of that number over the year divided by your 5% down payment is your net worth ROI. Because you are getting the home for 5% down and hopefully holding for the long term, you will almost certainly be get a better ROI than the ROIs you can get elsewhere in the investing world.

That is what I look for. Now, how do I calculate that? I have a great calculator to help figure this out.

The inputs for the image in this screenshot are as follows:

500k purchase price duplex.

Rent each side for 2k/month (this is after you move out)

5% down payment

Closing costs: 7k

6.4% interest rate

Insurance: $250/month

Utilities (paid by owner): $400/month

Vacancy budgeting: 5% of monthly rent

Maintenance budgeting: 8% of monthly rent

CapEx budgeting: 7% of monthly rent

Even though you are negative $312/month after budgeting for future expenses your net worth ROI is massively positive. Real estate is one of the best ways to build long term wealth. And house hacking is an incredible hack to get started with only 5% down.

(see screenshot below).

 Hey, Codey, if you decide to wait until the rates drop, the prices will likely be higer. I'm personally buying pretty aggressively with the plan to refinance down the road. With that said, I'm still making sure the deal makes sense with the current rates. Good luck! 

As corny as the sayings "marry the house, date the rate" and "don't wait to buy real estate, buy real estate and wait" are....they're true. 

Looking at how much interest you're paying over the life of the loan is gross, but how realistic is it to think you'll actually be paying on house for 30 years? Not to mention with a house hack, YOU aren't paying all of that interest, your tenants are (you will be at first when you're occupying a unit, but you get the point). Is it better to not buy a property to avoid paying interest, or better to buy and pay the interest and have someone cover some/all of your mortgage? Of course paying cash is the the best case scenario, but not feasible for most people. 

I don't like to tell people to plan on a refinance because I don't have a crystal ball, but you have 2 possible outcomes. Rates get higher or stay the same and you do nothing, or they drop and you look into refinancing. 

I don't have as much info as the lender that pre-approved you, but based on the info you've provided and assuming you have decent credit, there's a good chance you can get that rate closer to 6%. I'm also in Ohio and priced a $250k duplex with the minimum 3.5% down and a 700 FICO, and came in at ~5.9%. While I don't believe you should pick a lender based solely on interest rate, that is an important factor in evaluating cash flow when you're talking about house hacking. 

Hope that helps a bit, happy to connect if you have any questions or would like to discuss further. Good luck! 

The interest rate you were quoted is not high.  Freddie Mac — the main industry source for mortgage rates — has been keeping records since for a very long time.  Just for context, in the last 50 years, between April 1971 and March 2024, 30-year fixed-rate mortgages averaged 7.74%  In October of 1981, mortgage rates reached an all time high of 18.63% (average) to as low as 2.65% in January of 2021.  If you keep reading many of the topics on the forums, you will come to find many people sharing  posts where they attest to paying 18.63% in the '70's for their homes.  Thank God we are not living those times any more.

It seems that you are a  young person, so naturally, you may be comparing the rates you were recently quoted to the rates of January 2021. And sure, who wouldn't want a lower interest rate?  But as many people before me have said (in many, many posts in the forums), the best time to buy real estate is now.  It is impossible to time the market. Rather get in now, start building equity, start house-hacking, and wait for those opportunities to come your way.  And they will.  Do not wait until "interest rates" go down, get that duplex now.  If you wait, someone with more money may come in and give a better offer for that duplex.

By purchasing now, you are assured that the property is yours and when rates come down, voila!  All you do is simply refinance.  If you were able to "make it" with the "high interest rate" of 6.75%, then you will obviously be able to make it at a lower interest rate....you might even cash flow, thus allowing you the opportunity to buy another property and scale your way to success.

@Codey Wendel

Congrats on being pre-approved!! If your fear is on a 30 year time horizon, then your lens should also equally look at the potential upside down the road over 30 years. Also, who is really paying the interest? 

And, house hacking is a completely unique strategy because it's also providing you shelter. 

Great insights from @Philip Polski. Timing the market is very difficult, and not all stars will always fully align. 

Low prices, low interest rates, high rents, great buyer sentiment with no economic issues, etc. just do not happen all at the same time. 

Best of luck to you!

Interest rates aren't at their lowest right now; they're still higher than the recent record low rates, at roughly 6.75%. FHA loans are a good option for duplexes, particularly if you have between $200k and $250k to spend. Getting a property without a lot of competition and accumulating equity through monthly payments are two benefits of buying now. Cons include having to deal with future rate unpredictability and paying extra interest over the course of the loan. Perhaps later, if interest rates drop, refinancing could reduce your monthly payment; nevertheless, beware of additional costs. Utilize a mortgage calculator to calculate the payments, take into account your schedule, and speak with a Columbus local lender. Don't procrastinate; good offers can still be found; waiting for the ideal pricing sounds lovely.

I didn't experience interest rates like this but when I bought my first house hack a few years ago I got an amazing interest rate but thought this has to be the highest this house will every be worth. I thought for sure I was overspending by thousands even hundreds of thousands. But I didn't wait and now that house is worth 200k more. Glad I didn't wait.

I bought house hack #2 when everyone started panicking about rates, I was spoiled with 3% and bought down a 4% IR. Now rates are 6-7. I'm glad I didn't wait.

My point? Don't wait to buy real estate, buy real estate and wait. 

This is an ongoing conversation with Buyers all over the country. Here's the problem: This is an ongoing conversation with Buyers all over the country.

You can wait, but so is everyone else. This means if/when rates drop, you are going to be competing against other buyers, driving the price up. I don't think it will be like 2021, but there will still be more competition.

Versus, buying now, rates drop, competition increases and prices go up, and you get to ride it out. Next year (or whenever), you can decide to refinance. But at least you will be in control.

In my opinion this is a simple question. Compare your cost of ownership with the cost to rent. If you factor in house hacking it's a no brainer. Your tenant will pay most of part of your mortgage. 

I wouldn't plan on interest rates going down much, act on what important now. Trying to time the market typically leads to 

. If purchasing is a long term decision then you will be just fine. 10 years from now you will be way ahead. 

Don't over think this, you can always rent both sides later and buy another one.