All Forum Posts by: Chace Fraser

Hi @Tyler Piciullo. 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.

House hacking is technically possible in ANY market. The question becomes how much can you save (or make) by house hacking. If you are using a low down payment, it's not really realistic to expect to be cash-flow positive while you’re living in the property. When an investor is looking at being cash flow positive, they are typically putting down 25 percent or more. If you are in a high-demand metro area, it's simply not realistic to expect to be cash-flow positive while you’re living in the house 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. Also, keep in mind that in my opinion, you would still be winning if your monthly housing costs went from $1,400 to $900… wouldn’t that would be the equivalent of producing an extra $500 a month in cash flow that you could save up for your next investment?

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

@Deric Allen, 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!

As far as loans go FHA is not your only route. There are conventional loan products like HomeReady and HomePossible which may actually be better for your first property (and have a low(er) down payment option).

You could purchase the first property with the 5 percent down "home possible" conventional loan, and then purchase the second property with you FHA loan.

Game Planning for multiple house hacks can get a little tricky… which is why it’s imperative to work with professionals who know what they’re doing!

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. 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.

Keep in mind, if you are using a low down payment, it's not really realistic to expect to be cash flow positive while you’re house hacking / in the house hack. When an investor is looking at being cash flow positive, they are typically putting down 20-25 percent or more. If you are in a high-demand metro area, it's simply not realistic to expect to be cash flow positive while in the house if you are putting down 0-10%. However, the property must cash flow after you move out for the deal to make sense (in most scenarios).

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

Hey @Kevin M. Que first of all, thank you for your service!

It looks like @Colton Hahn could be your expert on VA benefits! Also, keep searching around on the forums for people who ask similar questions to your and the people who answer them. It is okay to chime in on someone's post and ask someone a question :)

Hey @Carlos Villegas first of all, thank you for your service. House hacking is a great way to get into real estate investing.

There is a lot of great information on this thread. 

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.

Best of luck and let us know how it goes! Feel free to reach out if you have any questions.

Hey @Brenda Stephens, I agree with both @Adam S. and @Zachary Balas. 

Is the property on the market or is it just sitting vacant? Also, do you have a realtor (hopefully experienced with house hackers)? The agent would be able to help you find a lender that has the 203k loan in their arsenal. You need to make sure you find quality, experienced professionals. 

A good way to find people is here on BP. Go to "network" at the top and select either real estate agents or mortgage lenders.

Best of luck!

@Misti DelMar 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.

Besides surrounding yourself with the right people, the two initial and essential members of your professional team will be a lender and a realtor. 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).

When it comes to selecting a realtor to work with some may ask you to sign an agreement that you work with them exclusively. This is nice for the agent because it's really frustrating to work with and educate someone for an extended period of time, show them a bunch of properties, and then find out they used another agent to purchase the property. It's not bad to just ask a realtor questions. However, it is courteous if you are going to ask them questions, you let them know you're just educating yourself before you purchase (and if you are speaking with other agents) and to offer to buy them coffee/lunch/a beer. If you like them, and they seem competent, then use them. If you're comfortable signing an exclusive agreement with them then do so. If you do sign such an agreement you can usually terminate the agreement at any time simply by notifying them in writing (email works).

It’s also important to know that they probably won’t show you properties until you are pre-approved. There are a few reasons for this.

First and foremost it protects their time. A buyer who has gone through the process of getting pre-approved is serious about buying and not just kicking tires. The agent probably has a number of other qualified buyers ready to go. Why would they show homes to someone who isn’t yet qualified when they have buyers who are qualified and ready to go look at homes and make offers?

Second, and in the same vein, is to protect their current clients. Imagine this: you have been pre-approved, you tell the agent you want to go look at a property tonight, and they say they can’t because they’re showing another client properties tonight. Now imagine the property you wanted to go see received an offer and that the offer was accepted. How would you feel if the buyer the agent was touring the night before wasn’t ready, willing, and able to purchase (pre-qualified) and you missed out on the property you wanted to see and/or buy?

Lastly, a lot of times SELLERS won’t allow agents to show their properties to buyers who aren’t pre-approved. The reason for this is that the seller doesn’t want to go through the hassle of cleaning a property up, leaving the house, or notifying tenants that there will be someone walking through the house if the buyer isn’t able to buy. It’s just not worth the headache for the seller to go through all of that when there are a lot of pre-qualified buyers out there.

Besides figuring out what your goals are, how you want to get started, and meeting like-minded people, the first action item would be to talk to a lender. In my experience working with house hackers and investors, 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 or investors 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

Best of luck!

 Hey @Noah Stout absolutely, happy to help! I reached out to my lender when I saw your question before I answered. She said that it was possible and that she'd done it a lot.

As you can see, you may need to ask the same question to a few different people until you find an answer that you like :)

Hey @Jimmy Chung, first of all, thank you for your service (you too, @David Bain and @Doug Spence)!

I think the advice from both @Jason Howell and @Kayla Givens is really good. 

For your first house hack, start simple and go from there. Find a nice, pretty property that is in great shape and make sure the numbers work... as Kayla said you may have to go SFR to start. There are plenty of houses out there right now that can potentially work for you.

Finding a property that pays you to live there, or with a mother-in-law suite and an ADU, will also come with a unicorn on it! Don't try to hit a grandslam. Get a good first property and then move on. Don't try to hit a home run with a rundown pile of junk that might make you some money or might sink you. Most of my clients have base hits properties. Base hits add up in the long run to an amazing portfolio.

@Candace Ly 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.

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!

Sounds like you’ve done a good job of getting your mindset right, setting goals, and creating a strategy! 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.

Be sure to connect with @John Knisely and good luck on your journey! Feel free to reach out if you have any questions!

@Gilbert Foelscher 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.