All Forum Posts by: Mario Mach

The drawbacks of house hacking are the same as the drawbacks of almost every other wise financial decision, such as not buying new cars, not going into credit card debt, or investing in your 401k. Just like your friends with massive credit card debt may have nicer clothes than you do, your friends who aren't house hacking will have more space, privacy, and comfort in their own home. From the outside looking in, it will look like your friends are wealthier and more comfortable than you are.

The good news is you won't be paying to live in your home like they are, so you can buy six houses in the time it takes them to buy one. Because of that, while they're at work paying for their house and their junk, you and your wife can be in your living room with your baby, writing BP forum posts at 3:10pm on a Wednesday, because neither of you need a 9-5 job anymore since you have a multi-million dollar portfolio working for you (true story, its our story) .

To answer your down payment question, there are two reasons NOT to put 20% down on a property - you can't afford it, or you can but want to use more leverage to invest in more properties. The reason for this is that Private Mortgage Insurance (PMI) is a requirement for loans with less than 20% down, and it will eat up $100-$300 of your cash flow, every month, until you get 20+% equity in the property. If you get a 3.5% down FHA loan PMI is there forever (or until you refinance).

@Mario Mach - you're 100% right, if you have great credit, good W-2 income, and just a little bit of savings buying a house hack is a financial no-brainer. We started with this strategy in 2013 and have 6 properties in King County / Seattle now.

Like Gray said, yes a higher purchase price won't change your down payment much but if you're only putting 3.5% down its unlikely that your lender will give you a very high pre-approval amount. Your first step should be to get this pre-approval - you might qualify for a $800k purchase price or a $400k purchase price, we really can't say until you share your financial info with a lender. Click on my profile and send me a message if you want the contact info for two good ones I use on my investment purchases.

Washington State Housing Finance Commission Down Payment Assistance (a mouthful I know, WSHFCDPA for short) is another option if you're having trouble swinging the 3.5% or more. To summarize, WSHFC is a non-profit dedicated to helping every Washingtonian own their own home, and this program allows us to take out a loan with 3% down, then get 4% down payment assistance so the cash required to close is super-minimal (as little as $6,000 in some cases, depends on the purchase price of the property though).

This strategy works really well when you can combine it with house hacking. One reason this works so well is that owner-occupant financing (when you live in the house) has lower interest rates than investor/landlord financing, so you get the best of both worlds if you rent part of your primary residence out – rental income, tax deductions, and low interest rates on your home loan. You need to attend a homebuyer’s class taught by a WSHFC trained Realitor and Lender, I’m trained and am teaching a few of these early this year. Let me know if you’re interested in the classes and I'll ping you when the date of the next one is set.

Cheers and good luck! Message me anytime if you'd like to grab a coffee and talk house-hacking, it's changed @Jess Haas & my life for the better!

It can be done. I have a friend who is a massage therapist and has a house in Bellevue near Bellevue mall. He lives in one bedroom and rents out other two.

However, as you know, RE is very expensive in Seattle (and Bellevue). I have a small 2bed/1 bath in Seattle and the tax assessment is now $500k. For a house large enough to "hack" it's going to be more like $750 at least.