All Forum Posts by: Chace Fraser

Hi @Lisa Borowy, Welcome to BiggerPockets! BP is a great place to find people, both virtually and in real life, who are doing the type of investing you are looking to do. You can find local meetups in your area by going to Network>Events up in the menu bar. I’ve found that people in the BP community are incredibly friendly and willing to help.

The answer to whether or not you should get your real estate license is “it depends”. It depends on how many transactions you will do per year. You’ll likely need to do at least 3 per year to make it worth it. Also, did you know that 85 percent of people who get their license are no longer in the business the following year?

Also, another question you need to ask yourself is do you have the time to get your license? It could take up to 100-150 HOURS of study before you’re allowed to take the test! And if you’re only going to have it so you can save a couple bucks here and there it’s probably not worth it.

Pros to having your license. MLS access and being able to roll your commissions into purchases. Experience in transactional real estate.

Cons to having your license. Fees, fees, fees and more fees! Realtor Association fees, MLS dues, brokerage fees. The learning curve is pretty steep and can be stressful. Continuing education requirements, etc.

Best of luck!

@Jason Cook, congrats on getting your second property... you're crushing it!

Did you happen to speak with your previous lender about this? The easiest, fastest, and best way to get answers to your questions will be to sit down with a lender (or 2 or 3). They're not scary, I promise. They're there to help you. Write your questions down and ask ALL OF THEM! Asking all of these questions will also help you determine if they know what they're doing when it comes to working with house hackers and investors. Believe it or not, they want to help you and lend you money. They're looking for ways to lend you money, not excuses not to lend you money. If they are able to get you to qualify for a loan, and you use them as a lender, they get paid. They want to give you money.

Good luck on your journey and feel free to reach out if you have any questions!

@Shane Kelly

Welcome to BP and best of luck in your real estate investing!

There are tons of advantages to being a realtor while being an investor. I got my license because I wanted to expedite my learning by going through real estate transactions. I also wanted to learn as much as I could in regards to multi-family investing. After I passed my test I signed on with an investment-minded company that specialized in multi-family properties and owned a property management company. Essentially, I was getting paid for real-world experience that I really desired and could use down the road when I wanted to house hack and own a portfolio of rentals. I was getting paid to learn what I wanted to learn in order to achieve my goals!

MLS access is wonderful, but another huge advantage of having your license is being able to roll your commissions into the downpayment of a property. Yes, you can roll your (whatever percentage) commission you get from the deal into your down payment. So if you're going to house hack with an FHA loan, you won't have to bring the full 3.5 percent down to the closing table!

@Christopher Fetveit it doesn't get any better than @Tim Johnsons advice!

@Mike W. 

Welcome to the BP community. Just by joining you are taking the first step to financial freedom. I think house hacking is a great way to get your feet wet in rental investing, especially if you can find a duplex or so and live in one half and rent out the other half.

The two initial and essential members of your professional team will be a lender and a realtor. You need to make sure you find quality, experienced professionals. These two members of your team can make the process great or terrible. They can make a deal happen when it looks like it’s going to fall apart or they can kill a deal that is on track to close. These two team members will help you fill out your team by leveraging their professional networks (inspectors, lawyers, escrow officers, CPA’s, etc). It’s never really too early to start making these contacts.

When it comes to Realtors, they will help you identify which areas of town are good to invest in and what to expect in rents, quality of tenants, how to analyze deals, provide you with investing opportunities (both on market and off market).

In my experience working with house hackers, the majority of the questions center around financing the deal.

When it comes to finding the right lender there are a few things you’ll want to keep in mind. Lenders, like realtors, are not all created equal. In order of importance, here’s what I think is important to look for in a lender. You want to make sure your lender:

• Has worked with house hackers before; the rules change depending on what loan type you use and how many units you purchase. There are A LOT OF TRAPS along the way that can/will make the deal fall through (and cause you to lose your earnest money). You want to be sure the lender you choose has navigated them before.
• Can help you strategize the lending piece for this purchase AND purchases in the future
• Is an investor themselves

BP is a great place to find people, both virtually and in real life, who are doing the type of investing you are looking to do. You can find local meetups in your area by going to Network>Events up in the menu bar. The best way to find an investment realtor or lender would be to search people on here who are lenders/agents and ask them to recommend one or two to you (I did this by sending them a private message). Another great way would be to post on the forums who you are and what you're looking for.

I’ve found that people in the BP community are incredibly friendly and willing to help.

Good luck!

@Ryan Badowski welcome to BP!

As you may or may not know, for the most part, you can only have one FHA mortgage in your name at one time. There are exceptions that are few and far between (like if you were moved to another area by your work), but for the most part, it's only possible to have one at a time. If two people are on the same FHA loan, then this counts as their one FHA loan.

This is an all-to-common pitfall that people get into because they didn't plan out their financing strategy for any properties beyond the first one (either because they didn't know to ask or the lender wasn't savvy at the time to explain the challenges of using an FHA loan). Or the FHA loan was their only option at the time.

Honestly, the best thing to do would be to speak with a lender who has worked with house hackers before and have them help you devise your strategy for your next purchases. You can bring the following suggestions to them and ask questions.

However, here are your options:

1. Purchase the next property with a conventional loan. The conventional loan programs and down payment rates for owner occupied multi-family properties change often. Simply google all of the following: “fannie mae matrix”, “freddie mac matrix”, “Home possible matrix”.
2. Have someone else buy the property (significant other) and leap frog the loans. This is what my wife and I did.
3. Refinance your FHA loan into a conventional traditional owner occupied mortgage. However, there may be minimum equity requirements and/or a need to live at the property for an additional amount of time… like around 6 months (verify with your lender).
4. Refinance your FHA loan into a conventional investment property (non owner occupied) loan. It'll have less attractive terms and rates, but you don't have to wait that 6 months.
5. Sell

Best of luck and let us know what you decide to do!

@Emmanuel Toribio

Welcome to BP and congrats on working towards getting your license!

A great place to start is https://www.biggerpockets.com/forums/521-events-and-happenings which you can use to find like-minded people in your area.

BP is a great place to find people, both virtually and in real life, who are doing the type of investing you are looking to do. You can find local meetups in your area by going to Network>Events up in the menu bar. I’ve found that people in the BP community are incredibly friendly and willing to help.

@Kaylinn Restrepo the advice from @Joe Splitrock is great.

House hacking is an incredible way to get into buy and hold real estate investing with a relatively low financial barrier to entry… plus the added benefit of reducing housing costs!

Getting your mindset right, setting goals, and creating a strategy are essential first steps to investing in real estate. It's also crucial to surround yourself with the right people.

There are many people that you will need to surround yourself with. To ensure success you will definitely want to associate with like-minded people, people with experience and who are already doing what it is you want to do, and people who inspire you… not naysayers, negative people, nor critics. BP is a great place to find these people, both virtually and in real life. You can find local meetups in your area by going to Network>Events up in the menu bar. I’ve found that people on BP are incredibly friendly and willing to help.

If you’re looking for some of the best books to read when it comes to real estate investing, BiggerPockets has created their own list which you can find here: https://www.biggerpockets.com/blog/wp-content/uploads/2018/11/Best-Real-Estate-Books-Ever.pdf

A book by @scott trench called “Set For Life” is in there and it is a GREAT READ on house hacking. Another great book that is not on this list (yet) is @Craig Curlop’s book “House Hacking Strategy”. These two books are phenomenal.

Hey @Gabriel Zurita, welcome to BP! How you are planning on beginning sounds very similar to what my wife and I did (except we did it in Portland, Or). 

Keep in mind, in high cost of living areas being cash flow positive while house hacking and living in the property is not always easy to achieve. I'm an agent in a high cost of living area and the first couple "hurdles" a house hack financial analysis needs to clear are "will the buyer reduce their housing cost" and "will the buyers housing cost be lower than market rent"? If the answer is “yes” to both we move forward, if it is “no” to either of these then we pass on the deal.

If you are using a low down payment option, it's not really realistic to expect to be cash flow positive while you’re house hacking and living in the property. However, if your house hack reduced your housing costs from $1,200 to $600 per month, would that not be a win? Wouldn’t that would create an extra $600 per month of “cash flow” that you could save and invest in your next property? Keep in mind the property must “float” (rents cover mortgage) after you move out for the deal to make sense (in most scenarios). When an investor is looking at being cash flow positive, they are typically putting down 20 percent or more. If you are in a high-demand metro area, it's simply not realistic to expect to be cash-flow positive if you are putting down 0-10%.

Now if that is all the capital you have, that is what it is. Is it better to keep renting than to buy? Typically it is better to buy. Better to build your own equity through the debt paydown, enjoy the tax benefits of ownership, and garner the equity of an appreciating asset. You just can't expect to cash flow on an initial purchase with a low down payment. Now with time and rent growth, what could be a negative cash flow property might very well become a cash flow king, but that takes patience.

Another way to increase cash flow would be renting out rooms in the unit you live in, either Airbnb or longer term.

Best of luck!

@Chandler Butler congrats on working towards getting your license! The best way to find an investment-friendly brokerage would be to search people on here who are brokers/agents and ask them to recommend one or two to you (I did this by sending them a private message). And you did it right by posting on the forums who you are and what you're looking for (here's a link to the post for some comic relief). You will certainly want to associate yourself with someone who is excellent at training and doing the types of transactional real estate you want to be involved in.

Looks like you have a good head start with @Brenden Mitchum. However, and I'm sure Brenden would agree, be sure and speak with a couple of different agents/teams to make sure you fit within their culture and that there are team members who are successful at doing exactly what you want to do.

If you have any questions please feel free to reach out.