All Forum Posts by: Tomas Valladares

Congrats on this deal, Ryan! Wish we had unfinished basements down here in Texas!

Thank you so much for your very detailed response, Andrew. I had made that comment over a year ago and since then I purchased my first house hack. Just as you mentioned, I learned quickly that this would not be a cash-flowing deal in Texas. I bought the nicest house I could, and I have three other roommates who haven't been late on rent for 10 months now. I'm paying about the same to live in my house as I was splitting a 1-bedroom apartment with a roommate, but now I'm seeing that appreciation, sweat equity, and tax benefits you touched on.

I love reading comments and posts like yours to give me a refresher on why I got into a house hack in the first place. Thank you for taking the time.

Hey Ananth, I house hack a SFH in DFW and we have 4 cars to a 2 car driveway. We've never put a car in the garage. So yes, most people in the south don't keep their cars in the garage which is why you run into properties with converted garages. North Texas sees a hailstorm every 1-3 years so the carport idea mentioned earlier should be taken into consideration if you don't want to discount rent as much.

As for the missing sprinkler system, with how hot our summers are, the grass ends up being fried regardless. If you're concerned about how the yard looks, I would recommend using grass seed that is native to Texas and can handle the heat in addition to xeriscaping to save on water. I would use my capital to make other improvements or investments rather than spending on a sprinkler system.

I have seen people put their rooms as a marketplace listing on Facebook to get more reach. Also, roomies.com is a popular choice.

Hi Max, congratulations on closing! This deal sounds like a great opportunity. Just out of curiosity, what made you choose to add in the private loan? Was that for covering the construction costs?

@Dan H. Thank you for your great points. I apologize, I should have specified further on the payments. The 2400 figure is full PITI and, after estimated utilities, I expect my housing payment to be ~635 while I currently pay ~620 in my apartment and they are raising my rent in July. Given that two of the roommates are family, I expect a relatively low vacancy. I've seen most "room for rent" postings in my area get filled in around 2 weeks. You do have a point about capex as that will likely come from my savings and/or W-2 income. The amount of capex I see on a 3BR house will depend on several other factors that I will certainly keep in mind when house hunting.

@Marian Smith Thank you for your advice on location. I also hadn't considered buying out of my lease later on, but that's something I'll look into if the closing date comes close. I'm graduating college in May with a degree in finance, going into insurance underwriting, and there are several companies hiring in Dallas. I will certainly look for an investment that would benefit the most from people coming to DFW.

@Walter Jones Thank you for your response! The interest rates you mentioned make this strategy break even in terms of lowering housing expenses, but I would still benefit from all of the other points you listed. Congratulations on your successful house hack! Texas has so much land that small multi-family properties are hard to come by, but I love seeing the returns that those investments bring to other house hackers.

@Doug Spence Thanks, Doug! Would you refer to the amortization schedule to see how much would be going toward your principal by x time? It's my understanding that the amount that goes toward your principal is the "loan paydown" benefit investors refer to. Is that correct?

@Brandon Bartley Thank you for your response, Brandon! It really does seem like a great time to invest in DFW. In Denton where I am looking to buy, not many houses have been on the market for under 300k in recent years. Would you mind explaining what you mean by the affordable properties being "insulated?"

@Bryan Martin That is a great question and the answer is yes. Right now I am in a mid-level 500 sqft single-bedroom apartment that I share with my partner and plenty of roaches and fire ants. On average, I am seeing 3bd 2ba 1000-1300 sqft SFHs available that would work with my strategy. Although I would be paying the same in housing expenses each month, I believe my quality of living would increase dramatically.

Thank you everyone for your responses! I started having second thoughts last night when I decided to make this post but your responses have confirmed that I am on the right track. After years of studying and saving throughout college, I am excited to finally take action.

@Lawrence Potts Hi Lawrence! This is exactly what I needed to have listed out. I hadn't considered the networking aspect of a house hack, but you're completely right. I would much rather be a player than someone that wants to be a player but waits for "perfect" market conditions that never seem to realize. Your last point on autonomy is also quite true. In my current apartment living situation, I have little control over rent hikes and various other things (just this week they randomly renovated the mailroom so we can't check our mail for a week!). Nonetheless, thank you for your response and I'll be sure to let you know what ends up happening.

@Eric Yu Thank you for your response! Your last point is something I've been thinking about a lot lately. From what I've heard, it still makes sense to purchase at a "higher" interest rate as long as the numbers still work. If they do work, then a refinance later on will REALLY make them work. In the DFW market, housing prices are also dropping slightly when rates go up. I'm looking forward to the wealth-building factors you mentioned as well as those would push my "lateral move" in housing expenses toward the more favorable side.

@Devin James Thank you for sharing James! That helped me confirm how my rent-by-the-room strategy will get me started.

@Ryan Thomson Thank you so much for responding, Ryan! Since reading Craig Curlop's book a couple of years ago, I had forgotten about the net worth ROI so I'll review that and see how the numbers look. Just based on principle, I am trying not to rely too much on appreciation especially with the FED raising interest rates over the next year or so. However, the DFW area is growing fast and I would be purchasing close to UNT and TWU which are two growing universities here. I will likely find a property that needs some sweat equity to help accelerate that appreciation.

Thank you both for your input. I was pretty much going through this blind and wanted to check if this was still a reasonable decision.

Hi BP community! I'm looking for some guidance on house hacking. 

Background:
I'm in the DFW area and preapproved for 300k at 7.25%. The houses in my area that could work (3bd 2ba) are at the bottom of the market around the 260k-280k range. Putting 20k down, my expected housing payments are going to be around $2400 a month. I'm estimating $1800 in rental income from three roommates so I will be paying ~600 a month. I am currently paying $600 a month in my current apartment.

Question:

With current interest rates, I am not able to lower my housing payment below what I currently pay in rent. However, I am able to get myself into a house where I will be able to pay rent back to myself and build equity, likely appreciation, landlord experience, and increase my quality of living. Does this count as a house-hacking win? 

I know most people try to lower their housing payments to below what they would pay in rent but that's not going to be possible in my case. Also, I do not expect I will be able to have positive cash flow after moving out unless rents in my area increase and/or interest rates fall.

Thank you very much for any responses! Please let me know if you'd like any other details.