All Forum Posts by: Tim Holt

You appear young, Tim. If so, then yes this is quite a solid option. I would hesitate to say 1-2 years to rotate out but closer to 5 years, and ideally I'd try to get the downpayment higher to at least 10%.

I understand your areas though-- they're expensive. It's a low barrier to entry and a good option for you, I would highly and I mean highly recommend you focus on location. If you really want to do this right, be a bit scrappy buy the ugliest in the best neighborhood and slowly fix it up over the years.

Imagine buying the worst triplex in the best area. Living in the worst unit each year and fixing it up-- the equity gain is just going to be phenomenal. You will reap the rewards.

@Tim Holt

From my experience, house hacking can work well if you focus on minimizing living expenses and setting yourself up for future cash flow. Start by analyzing market trends and targeting neighborhoods with strong rental demand. Look for properties with features like separate utilities and layouts that appeal to tenants. Pre-approval for loans is essential, as is learning landlord-tenant laws to manage effectively. This strategy can set you up for long-term appreciation and scalability in your investing journey.

Good luck!

@Tim Holt Come February, it's legal to create an ADU by-right on any single family property in the entire state. I feel like this may be the best opportunity for house hackers as there will be some early adopters who capitalize on it because you can basically turn a single into a multi. You can find SF properties that already have in law suites, garage units, etc, and now legally rent those, so it should increase the appraised value significantly. I'm kinda surprised more people aren't talking about it because it's a fairly transformative law, allowing investors to create ADUs as well. Anyways the link is below of you want to take a deeper look, feel free to connect if you want to chat more about it!

https://www.mass.gov/info-details/accessory-dwelling-units-a...

@Tim Holt, Yes INDEED house hacking is the best option for most 1st time buyers.  The question to ask is:  Is my housing cost better by househacking vs renting.  Small multi-family property is where I would start.  If you are single or married with a small child, buying a duplex or 4plex should work well.  Usually living in it for a few years may be enough for it to cash flow positive when you move out.  

Once your property is cash flow positive then you have tenants buying your property for you.  It may even take a 3-5 years to get cash flow positive but if during that time it is cheaper to own monthly, than pay rent, you are way ahead.  Remember there are 4 ways you are getting ahead by owning a small multifamily property (houeshacking initially).

1.  Monthly housing cost less (due to tenants paying rents in the other units)

2. Principal buy down that occurs with each payment met.

3. Property appreciation that you realize that you don't get if you rent.

4. When you move out you begin to experience POSITIVE CASH FLOW in which your tenants help you buy the property.....where eventually you own it out right, and now it becomes like a pension..........Predictable and Sustainable income for life.   

This is one of the last investments that the common man or woman can make and get ahead in life.  Good luck.

@Tim Holt It's absolutely worth it. In fact, I think it's the most viable option for real estate investing today. But I am bias, seeing as I have been house hacking for the past 5 years. In that time, I've purchased two duplexes in Beverly, MA. Cash flow is realistic, but quite frankly you make your money here in appreciation. I thought I was buying at top of the market in 2020...and 2022...but prices continue to remain high. 

You have to think about your goals and whats important to you here. I tell people if they can match their current rent or do better then it's likely worth it, but you may need to get creative on the cash flow part if you only plan on living their a year or two. Maybe do the by the room strategy, or STRs. The world is your oyster. But 1000% yes it's worth it. 

Hi @Tim Holt I think in general house hacking is usually a good move because it gets you off the sidelines and into the game with the most favorable financing possible (30 year fixed).

There's a lot of value in getting started today vs waiting some undefined number of years until conditions are better, which could be a long time from now, because real estate is a business and the sooner you start actually learning about that business, the better.

With all that said, I always recommend that people analyze any potential house hack as a pure investment that they aren't going to live in, because someday they may want to move out and you should know up front (before you commit) whether you're going to be able to do that, or whether you're overpaying and will be stuck in the property unable to move out because it'll be cash flow negative if you do.

So you had it exactly right when you wrote, "the property would need to cash flow when I move out and rent out all units."

The only way to answer that in general (whether house hacking in today's market is still a good option) or for a particular property, is to learn how to run the numbers and analyze a specific property to see whether it will be able to stand on its own as an investment when you move out someday.

There are a lot of resources here on BP for doing that but I'd just say, make sure the assumptions you're putting into your spreadsheet or deal analyzer are realistic.

Make sure the rents (especially for vacant units or pro-forma #s) are realistic by doing your own rent comps; make sure the mortgage rate is realistic by doing some research online and/or talking to some mortgage folks; make sure insurance #s are realistic by getting a couple of quotes for the # of units and zip code / area you're looking in; etc.

I hope that helps, and good luck 😊

Hey Tim,

House hacking is not just a good idea; it's a fantastic strategy for someone in your position. First off, kudos to you for building up the savings and diving into the multifamily market with an FHA or Fannie Mae loan. You're making a smart move, and that kind of foresight will pay dividends over time.

Now, let’s dive into your question: Is house hacking still a good option in today’s market? The short answer: Absolutely, yes, but with a few nuances to consider. I’ve worked with investors in similar markets (Providence and neighboring areas) and have seen first-hand how house hacking can be a game-changer.. even in today’s fluctuating market.

A friend of mine recently purchased a three-unit property in New Bedford, MA, just a stone's throw from where you're looking. He was in a similar position! used an FHA loan with 3.5% down, lived in one unit, and rented the others. The first year was tight because of higher interets rates, but his tenants effectively covered about 70% of his living costs. By year two, he refinanced to lower his rate and dramatically increased his cash flow. Fast forward three years: He's moved out, and the property now nets him close to $1,200 a month in profit after expenses. That's the beauty of house hacking.. it's a long-term play with massive upside.

What to Look Out For

1. Analyze the Numbers Thoroughly: With your goal of having the property cash flow once you move out, the key is to run your numbers with future rents in mind, not just what you’ll pay while living there. Websites like Rentometer can give you a quick snapshot of rental comps in your area.
2. Multi-Unit Strategy: If you can swing it, aim for a 3-4 unit property instead of just a duplex. Larger properties spread your risk.
3. Be Ready for Some Sweat Equity: Many first-time house hackers underestimate this part, but putting in a little elbow grease can drastically improve your returns. Painting walls, updating fixtures, or handling minor repairs yourself can save thousands upfront.
4. Consider Your Exit Strategy: You’ve got the right idea;house hack for 1-2 years, then convert the property into a long-term rental. Make sure the property meets the 1% rule or close to it (monthly rents = 1% of purchase price) to ensure it cash flows after you move out.

Yes, interets rates are higher than they were a couple of years ago, but rents have also increased significantly in many markets, including yours. From what I’ve read in the Wall Street Journal, average rents in Providence are up about 15% over the last two years, which could work in your favor. Plus, living in the property gives you the unique advantage of understanding it inside and out.. making you a better landlord when you eventually rent out all the units.

If I were you, I’d prioritize properties with room for rent increases or small upgrades that could boost value. It’s like my client in Omaha (where I’m based) :-) he bought a triplex where rents were under-market by $200 per unit. With minor cosmetic upgrades, he increased the rents, and now it’s one of the best-performing properties in his portfolio.

I also had a client in Providence last year who bought a fourplex. It wasn’t the perfect deal on paper. one unit needed some repairs, and the others were under-rented. but we saw the potential. He lived in one unit for two years, fixed up the property, and gradually increased rents. Now he’s moved out, and the building cash flows over $1,400 a month. Stories like these are what make house hacking worth it.

I hope this helps, Tim! If you want to chat more or dig into specific neighborhoods, shoot me a message. Whether it’s Providence, Omaha, Austin, or Phoenix, I’ve got the network to help you find the best deal and make it work for you.

Best of luck.. and welcome to the investing world; it’s a wild ride, but one that’s totally worth it!

Julian & Jasper

Turning investment visions into REALITY in Omaha, NE - Ranked as the #1 City to move to by Forbes Magazine.