All Forum Posts by: Matthew Brill

I would not waive the inspection contingency either. If he is not wanting to negotiate the inspection, you can make it pass/fail. Either you move forward after inspection or you walk away and get your deposit back.

I would go with the path of progress, especially if you aren't able to find forced appreciation in a property in the established neighborhood. Cash flow will help you towards financial freedom but the real wealth is made in appreciation.

Hey @James O. Coker II

I am in the south florida market. Feel free to reach out if you have any questions. I am particularly fond of house hacking.

I think finding a house hack and getting some forced appreciation would be my top option. Just dont forget to include the cost of the rehab on top of the down payment/reserves/closing costs. You are better off putting less down than 15% to have your money go further for you (especially since you with have PMI with 15% down anyways).

After that, attack other rentals. FL, TX, and NC seem like good targets to me.

You need a partnership agreement but not an LLC. I second what @Caroline Gerardo said.

You don't need an LLC for a house hack while you are living in it. You will lose your homestead protections.

It is worth hiring a CPA to do the taxes since you will be having to divide expenses (including depreciation) based off of rooms/sqft.

How long have you been living in the house? I think you can look back at your expenses over the years and see what your actual maintenance costs have been to use going forward for the next 3 years. Also, don't just look at your cash on cash return. While it is important to be cash flow positive to sustain the business, real wealth in real estate is made in appreciation. You will be seeing loan pay down on top of the cash flow, and depending on your market you may see more appreciation to come given the current economy.

I am in a not too different situation than you. I purchased a house that was for a house hack knowing that it would have poor cash flow when moving out and even have some negative months, but I knew I could support it and it was in a prime location to appreciate. There was obviously some luck involved but a recent appraisal showed I gained $300k in value over the past 4 years. Now I am trying to decide if I should sell it or hold off for another year with minimal to negative cash flow to ride some more appreciation/inflation and stay within my no capital gains window.

@Celine Corley

Nope. I have done 2 house hacks and both have had individually fenced yards between the units. And if you find one with a yard, you can always put up a fence or retaining wall.

It depends on the price point/monthly payment. Higher priced home it makes more sense to rent (with rent to value ratios less than 0.7). The less expensive the house/payment is, the more it will make sense to buy instead of rent (basically, it can function as a rental when you move out).

Also, don't rule out house hacking just because you have kids and pets. I house hack in a nice area, with a good school district, and a yard. The units have the front doors on the side and I hardly ever see or hear the tenants in the adjoining unit.

If the deal works the day you buy it then it's a good deal even if the housing market pulls back. You can potentially be under water on the mortgage but if it is a residential mortgage (1-4 unit property) then you can only default if you don't make the payments. So as long as your are cash flow positive you're good. You may not be able to sell without taking a loss but you can wait out the market as long as you want if you can make the payments. It's a different story for commercial loans.

I would be weary about going into a house hack with partners though. Depending on who they are and what the structure of the partnership it.