All Forum Posts by: Masyn Grant Barney

Exactly! Especially if you find the right property that is already set up well for an ADU. My house I bought in September had a nice basement entrance and large long living room that shared a wall with the mechanical room. Plumbing drains, water, and electrical were all VERY easy to run.

Value Add mixed with cashflow is such a good combo!

Hey @Cody Sears! Great post and question. 

I recently made a post about my favorite house hacking strategy which is to find a house that has a basement entrance or one that has some sort of side or garage entrance that opens up to the basement stairs and turn that into a basement entrance. Then add a kitchen in the basement to get your ADU.

Too many people want the ADU in place before buying, which drives up the price. This way allows you to add value quickly without having to compete on distressed properties that carry more risk. I spent about $6k adding my basement kitchen and it took me all of 3 weeks to do. I estimate my equity increase was between $30k-$50k immediately based on similar comps. 

Another strategy I like is finding a home with plenty of extra parking and renting the space on neighbor for RV parking. It doesn't add a ton of cashflow, but $50-$100 / month for a space you don't really have to maintain or market much is always a welcome bump to an already good deal.

Hey @Alyssa Henderson, I'm in Spanish Fork, great to connect! While I haven't done a traditional flip, I have done some heavy remodeling at each of my properties and have some unique ways to find potential on market deals. 

I'd love to connect and see if I have any tips I can share that would help you out. You should also come to the Bigger Pockets meetup in Provo that happens on the first Wednesday of every month. Let me know if you want more details on that. Best of luck!

@Eric Sato, Sounds like you have a good plan. I love the house hacking model and have done a similar investment where we partnered with some people that would be owner occupying it. 

It's a great way to take advantage of owner occupant financing while not having to owner occupy it yourself. The one caution I have is around your Debt to Income ratio. If you plan to buy another property in the next 12 months, your DTI will likely be negatively impacted.

The reason being is the house is "owner occupied" so you can't count rent against it. But you do have the full mortgage showing up. We were able to keep it off our DTI after 12 months by having the mortgage come out of our partners bank account. I would talk to a lender about it though because it could make getting future properties more difficult. Happy to connect you if you'd like! 

Hey @Augustine Tambe!

Like @Taylor Dasch mentioned, in this market it would be very difficult to cover the full mortgage by renting one side of a house hack. Especially here in Utah. But that doesn't mean it's a made move. In fact, I think its the best move you can do if it fits your life situation. 

If it makes sense for your situation, I'd suggest finding a house that has a basement unit. Live in the basement and rent out the main floor. I am a big fan of finding a house that has 4-5 bedrooms upstairs given how much you can get in rent for those. If Eagle Mountain isn't too far, there are some new homes with AMAZING price to rent ratios for Utah. 

If you don't plan to stay in Utah beyond two years, you'd definitely want to make sure the numbers make sense to at worst break even once you move out. Most on market deals don't breakeven in that timeframe without a significant down payment. But some do, so just make sure you are planning ahead. 

I'd love to grab lunch and see if I can be a resource in anyway. 

You have some great responses above from @Carl Davis & @Ty Coutts. 

Like they both mentioned, there is some amount of consideration for your life and family. But those decisions aside (We wish it were that easy, right?) I would make it a math decision. If your home is worth $500k today and you assume 5% appreciation over 1 year, that's $25k in appreciation. Would you rather give up $12,500 to your ex in order to get a lower rate? I would assume a rate drop of 1% at best. What does that save you? Maybe $200 a month. You'd need to hold the mortgage for 5 years to make it worth waiting under these assumptions. 

The only other thing I would add is that if you decide to buy another property (with or without selling) I'd highly recommend you do that before the anticipated rate drops. I hate the cliche saying "marry the house date the rate" but there really is some good advice in there so long as you can comfortably afford the mortgage at todays rate. 

Rates coming down will absolutely increase prices. Better to lock in the price now and refinance later. Hope this helps! 

Let's grab lunch and get you coming to the bigger pockets monthly meetups in Provo! I'll DM you

Like everyone has already mentioned, I think you need to sell that property. 

I would highly recommend getting into a good house hacking situation. I see house hacking as a way to learn the ropes of investing and land lording all at once. The almost free trial. You will learn what things a good property management company should do and what its worth so that when you do invest out of state in the future, you know what to look for. 

The two house hacking methods I find myself recommending to clients are 

1. The townhome/condo model where you rent by the room for the rooms you aren't using. This tends to be the best return you can get in UT if you are in a life stage to be able to do it. 

2. buy a decent single family home that already has a basement entrance and add a kitchen to make it an ADU. Value Add House Hacking while still getting a relatively nice property. Less competition compared to turn key house hacks. I am also a believer in not buying a property without any value add play.

I am a big believer in investing for appreciation (especially if it was forced appreciation), but $800 a month negative is just too much to swallow IMO unless that property was appreciating well over that every month and you had endless cash to burn. I haven't heard of such a property. 

My FAVORITE strategy for those looking to house hack right now 👇


Small multifamily and homes with basement apartments sell at a premium right now (Especially in UTAH).

They are some of the more sought after homes, and it can be tough to get a good deal if you aren't well positioned.

So I like to lean into a combination of house hacking and value add.

Find a home that has a basement entrance and has at least 1 bed and 1 bath down there.

Find out if there is a wall with convenient access to plumbing drains. and if that area could work as a kitchen.

If you find that, add a kitchen in the basement and turn it into a basement apartment.

You have now forced equity and created your own house hacking space.

What I really love about this strategy is that you can often get a nicer home this way compared to buying something that already had a basement unit.

I did this to my home in Spanish Fork for a total of $6k including appliances.

Looking at comps (unfortunately there aren't many) I believe I have increased the value about $30k-$40k.

That's a nice ROI for 3 weeks worth of work.

Have you considered this value add house hacking strategy? 

The Aug 17th Realtor commission changes have now gone into affect. How does this impact you?

First off, what changed? Primarily 2 things:

1. No more promise of buyers agent commissions posted on the MLS. This includes removing of all commission data from the MLS both past and present. This also applies to any outside websites that are directly linked to a listing on the MLS.

2. Buyers agents can't show a home without already having a buyer broker agency and commission agreement in place.


Buyers:

1. You now have to sign a binding agreement with your agent stating how much they will be compensated for their services prior to doing a showing. No this is not them strong arming you. We all have to do it to be in compliance.

2. You will be agreeing to pay your agent a commission just like you have in the past (albeit probably unknowingly). If you do not wish to pay this out of pocket, you will want to include an addendum in your offer requesting the sellers pay your agents fee for you.

The whole purpose is to put the buyers agent commission back in play as a piece that needs to be negotiated. Before buyers agent commissions were guaranteed by the MLS. Could they be negotiated before? yes. Were they? no.


Sellers:

1. Instead of paying your listing agent a commission that they would typically split with the buyers agent, you are now paying each of them directly (if you so choose). The agency docs have made the separation a bit more clear. If you get two nearly identical offers where one is asking for you to pay their agent 2.5% and the other is asking you to pay 3%, you get to decide if that .5% is worth it.

Many people believe that these changes have made it so sellers no longer pay buyers agent commissions. That is not true. They have just forced it to be more negotiable than it has in the past.

I still believe sellers will need to pay the buy side commission if they want to sell in a reasonable time frame and for top dollar. Good buyers agents still bring a lot of value to the seller by orchestrating a smooth process for both sides of the transaction. Those unwilling to pay a buyers agent commission will see drastically less traction and offers.

What questions do you have about these changes? Drop them below 👇