All Forum Posts by: Dominic Holt

There are only two things that are WORSE than house-hacking in an expensive market: 

- Renting in an expensive market

- Buying a home in an expensive market with no tenants occupying rooms/additional units to help you pay the mortgage. 

A house-hack doesn't have to completely cover the mortgage to be a far cheaper way to live than buying or renting. You can win without getting "perfect".

Hopefully, this gives you the answer you need :). 

 Actually, it doesn't. With very rare exceptions, one's never been able to have one unit of a duplex pay the entire mortgage. What it does do is make it so that you can live in an area that otherwise you could not afford to live in, since your out-of-pockets are lower. You have to start getting into four-flat territory before you can have the rents pay the mortgage, and your money build up reserves, etc.

Look at it this way: You live in Portland, Oregon. What would you be paying as an alternative to your duplex in order to live in Portland, Oregon? The assumption is that you have to live there. If you don't, then house hack somewhere else.

Whatever you do, get the idea that one rent takes care of the mortgage out of your head.

Hi @Dominic Holt

I house hack in an expensive area (North Shore of Boston). A few tips I think would transfer to your market.

-I would look for 3's and 4 unit buildings. Your out of pocket cost should be lower. 

-If looking at 2-family buildings, I would go for properties that have more bedrooms. Typically a 3 bedroom unit will get higher rent than a 2 or 1 bedroom. If you live in a 2 plus bedroom unit, then you can rent out your extra bedrooms to bring down the cost

-You mentioned in an example of coming out of pocket $1400 after collecting rents. Is the $1400 drastically lower than what you are paying now in housing? If not, then you are correct that it probably wouldn't make sense.

-You mentioned that other neighborhoods have higher priced homes at around $650k. Are the homes at $450k in the path of progress? Will they appreciate in value over time to that level? That doesn't necessarily help with your monthly costs, but long term it could help your wealth building journey.

-Value add is also another way to force appreciation. Can you buy a home that is a little bit of a fixer upper? Maybe at a lower price point? Being able to force appreciation can help you get to the 20% equity mark, and therefore drop your PMI, which will lower you monthly and out of pocket cost.

-I know the spirit of house hacking is to put as little down as possible. But instead of 5%, could you put 10% down (or something to that affect)? More upfront out of pocket, but could lower your continual monthly cost.

-Could you raise the current rent for the other unit? If you are not at market, try to get those rents to market as quick as you can. Rents tend to go up over time, so you should be able to bridge the gap.

Again, not knowing your market, I think these strategies could help. For me, the goal of house hacking is to drastically reduce housing expenses first and foremost. Sometimes it is a grind to get to the optimal out of pocket cost, but stick with it if you see a path to lowering costs. If you are paying the same amount or more than your current rent, then it is probably not worth it, if house hacking is the strategy. 

Hope that helps!

 I do. Our new tiplex is right by Ohio State and the demand is so crazy that our PM will have start looking for new leases in November of 2022 for September of 2023.