All Forum Posts by: Pat Rach

@Pat Rach I completely agree with @Scott E. as my experience was very similar. Depending on where you live 2-4 units many be extremely difficult to find or overpriced. I live in the Washington DC area and small multi units are hard to find at reasonable prices. If you can I would use Scott’s strategy of buying s house and rent rooms initially which Ks what I did and eventually can scale from there. Just recognize that no matter what you do there will be some form of sacrifice but it will be worth it.

I too did not like having roommates in my house but it was a short term sacrifice. My next steps now are now having a basement as a separate unit so the tenant would have their own space. This is another strategy that can be an easier way to get in.

Best of luck and I’m happy to answer any questions that you may have.

K Wade

@Pat Rach - if you haven't done it... then my advice is "just do it". Like Nike.  Okay not helpful, but the returns, when you only have to put 0-5% down, are amazing. If you can buy a home where you are paying the same as you would in rent somewhere else (b/c you are renting out other rooms or units), then I think it makes a lot of long term financial sense.  

Is that what you are asking? It sounds like you want a push. Or am I missing something and you're looking for some other type of advice?

Feel free to get in touch. Happy to talk. I have a spreadsheet I can share with you if you are a numbers guy and you need to see those to get started. It shows the return to you over each year you own it and really lays out why house hacking is an awesome investment. 

There are two BiggerPockets books you should read:

The House Hacking Strategy by @Craig Curelop

First to a Million by me :-)

Also, if you'd like to chat about anything real estate, DM me, and we'll set up a call!

Hey @Pat Rach,

I am currently house hacking a 4plex. It's the best decision me and my wife could have ever made financially. We used an FHA 3.5% down and luckily all of the units were vacant so we moved right in and started renovating.

The pros are obvious: leveraging your mortgage and offsetting the largest expense (housing) creates an enormous amount of savings rate. That on top of being able to depreciate the rented units, the tax write offs, principal pay down and appreciation over time, it’s an absolute steal of a deal for only 3.5% down. 

The challenges associated with house hacking are that now you are a DIY landlord and that can cause headaches if not taken seriously (unless you hire a PM). Make sure you have good leases! Pay for a good lease now or pay the cost of lawsuits, legal fees, and attorney fees later. Over communicate about projects, rent increases, etc. Everything about it should be approached professionally like it’s your own business. Know what is on your lease contract a d perform accordingly. You should have a software that is reliable to help manage like apartments.com. Don’t co-mingle funds! 

The more work you put into it upfront, the more you’ll be thanking yourself later down the road. Talk to landlords and other house hackers in your area and see what they’ve done or what they’re doing that makes their house hack successful. You can do it, treat it like a new business and you’ll do fine.

An example of a good lease: have in writing about any repairs that are over X amount of dollars should be fixed by the landlord. So if it’s a lightbulb that went out, you shouldn’t have to be the one to go do that (true story, learned my lesson the hard way).

Hope that helps! Good luck out there and let us know what you find!!!

Your offer has been accepted but not all the conditions to close have been met. The property is off-the-market but pending closure.  

Another way to look at it is that - as the buyer, you are literally under the contract as you have the burden to meet the conditions of the contract - like placing escrow/deposit, meeting the inspection and financing deadlines, more.

Hope this helps.

@Pat Rach an agent could probably explain this better than me, but when a property is "under contract", it means that the buyer and seller have agreed to a contract to sell the property at a certain price (provided certain conditions are met), and which describes all the terms that will govern how the parties will proceed with the sale of the property.

This contract typically includes the terms by which the seller is able to engage in due diligence (e.g.; terms governing how the buyer can inspect the house, check the title of the property, etc.). Importantly, the contract also includes terms that prevent the seller from selling the property to someone else while the contract is in place, and terms that prevent the buyer from exiting the contract except under certain circumstances.  Contracts also often include terms related to earnest money, how the buyer will pay the seller, the timeline for the due diligence process, the terms of the inspection (or lack of an inspection), the agreed-upon location, condition, dimensions and features of the property, how much the seller's and buyer's agents will receive, etc., etc.

In a nutshell, the contract lays out what is being sold, for how much it is being sold, and all the terms that govern how the buyer and seller will proceed with the sale--and it also makes it so that the buyer and seller can only back out of the sale under certain conditions (which helps prevent buyers or sellers from "flaking" out of the sale for frivolous reasons).

Except under certain conditions, canceling a contract usually means serious penalties to the seller and/or buyer; these penalties can include financial penalties, legal liability, and also the inherent penalty to both the buyer and seller of lost time, effort and missed opportunity.

Having said that, it is possible for a buyer or seller to cancel a contract. Although you generally want to avoid canceling a contract in most scenarios, and there can be significant penalties for canceling a contract, it is sometimes necessary. 

I rarely cancel contracts (mostly because I do pretty solid due diligence before I even make an offer), but I have had a couple instances where I had to cancel contracts--once when my post-contract due diligence discovered serious problems that the seller hadn't disclosed, and another time when a totally unpredictable event significantly changed the value of the property while the property was under contract. In both instances, my reasons for canceling were legitimate, verifiable, and legally sound--and as a result, I didn't have to pay any penalties for the cancellation (other than wasted time, and the disappointment of not getting a property I had been really enthusiastic about)...but, that's the nature of the game sometimes...

Hopefully that's useful info.

Good question!

Under contract basically means the buyer and seller have agreed to terms of a sale and have both signed the contract.

Wholesalers can go under contract with a seller but writing would state that they can “assign” the deal to another buyer, basically they can flip the contract to another buyer and then collect their wholesale fee. 

All good questions! If you ever can get your hands on an executed PSA (purchase sale agreement), spend some time studying it and that will help you when you start making offers, it helped me out a lot 👍