All Forum Posts by: Will Bazile

@Will Bazile I would probably put that in the highest yield/lowest risk/ you can get that has no early withdraw penalty. I think high yield savings account sounds like a good option for you.

However, you don't need to save that much to buy a house hack. 

I would look around your area/google/ask other investors if there is a down payment assistance plan that could cover your down payment. In Colorado Springs, I often refer clients to my lenders that can do down payment assistance loans. These are basically interest free loans that will cover almost all of your 3.5-5% down payment for a primary residence. 

As far as closing costs go, we normally negotiate that upfront with our offer. There are a couple easy ways to get the closing costs covered. 

I would connect with a house hacking focused realtor in your area. They should know all of this.

@Will Bazile good stuff. You should read Pillars of Wealth. It answers a lot of your questions and then some. 

80% is a great goal! Focus is always the key to success. If you can, don't rent, stay at home. It's not only rent, it's also utility bills, internet etc. Find a side hussle. Flip couches. You might think that's extreme, but when you take this approach to everything you do in life it will become part of your nature.

Friends: Hey, how come we never see you at the club?

You: Yeah, how come I never see you at the bank?   

well to be very honest is me and my wife had purchase home since I was 18, so that was long long time ago when CD rate I don't know.....what should really happen really, make sure your combined income , when DTI is maximinized, it can buy you at least one property that you can househacked. For example, If I know my max DTI gives me loan of $5k/mo ; make sure with that 5k/mo loan you can buy something like 3/2 or 3/3 ; the number of bathroom is important in househack scenario, that's where you can have separate entry in SF. Or you have additional 5-10k funding where that funding can be used to build bathroom/kitchen if necessary.

These househacking IMO is kind of art and creative solution. If you get the right home you could cover your entire mortgage from the start and forget mortgage payment for the rest of your life.

Finding suitable perfect househacking scenario is not easy and you must do some sacrifice.

Will, 

I'd recommend Wealthfront. I'm getting paid 5.5% right now and it has unlimited withdrawals/transfers. It's also FDIC insured up to $250k so no worries there.

I have a portion of my paychecks deposited directly into the HYSA and just keep enough in my normal checking account to pay for my rent, student loans, credit card payments (for CC's always pay on time and in full). 

Going to explore a Roth IRA next.

When deciding where to stash your cash, consider high-yield savings accounts with an aim for 3% or more APY—they're easily accessible and earn some interest. Short-term CDs, especially those with 6-12 month terms, provide slightly higher rates while still maintaining flexibility. I-Bonds, offering inflation protection and potential CPI-based growth, are worth considering, but keep in mind the one-year holding period. For allocating your funds, prioritize retirement contributions, ensuring you don't miss out on employer matching and maxing out your Roth IRA for the year. Allocate 50-70% of the remaining savings towards your house hack to aggressively save with room for other needs. Consider a smaller percentage (10-20%) for index funds for diversification, but keep your primary focus on house hacking. Some additional tips include automating your savings through automatic transfers, tracking your progress with budgeting apps or spreadsheets, cutting unnecessary expenses, and exploring side hustles for extra income. When it comes to investing during the saving phase, prioritize house hacking for short-term goals, like building equity and living rent-free, and consider long-term investments, such as index funds, after securing your house hack.

High yield savings accounts are where I kept my funds before closing on my househack. It's hard to beat a match for the 401k, but depending on your situation ROTH 401k's are great opportunities. My purchase price was $217k and I came to closing with $6,100. I am in a fortunate situation, but I think FHA having 7% of the purchase price and conventional having 9% could be possible. Negotiate those closing costs as @Vitaliy Volpov mentioned!  Remember you can always negotiate that at inspections as well, but finding an investor friendly realtor is so important.

Hey @Will Bazile,

This is an awesome question! I would do exactly what @Alecia Loveless isuggested for where to keep the money -- a high yield FDIC insured savings account to make sure that your money is safe and that you get as much of an ROI on it while you're building it up. I have been using Ally Bank for years to hold my cash reserves. Right now, their savings account interest rate is at 4.25%. The online interface is user friendly and you can get access to your money fairly quickly if you need it. I also have funds in a CD with them, which pays 5.10% right now, but there is a penalty for early withdrawal.

Alecia, which bank is offering 5.5%? I'd be interested in checking them out myself.

As far as your other questions Will, I think your goal should be to save at least 10% of the total target purchase price if you are going to be using FHA financing and 15% if you are going to go conventional to finance your house hack. This will cover your minimum down payment (3.5% for FHA, 5% for conventional) plus will allow you to cover your closing costs (if a seller concession/contribution is not possible on the deal you and your agent negotiate), plus it should leave you with some additional funds left as reserves in case unexpected repairs come up after the closing.

As far as how much you should be saving each month, you should try to save as much as possible. Yes, definitely max out your employer match for 401k and max out your Roth IRA. After that, bank anything over and above your regular living costs and expenses.

When I was saving for my first house hack, I was pretty extreme with it. I basically just covered all of my fixed debt payments and living necessities and saved everything else. I'm not gonna lie, it did help a lot that I had the option of living at home for a year after I started working. So, I did not have the rent payment to worry about. But, I did have to pay about $1,000 per month toward student loans, had a $300 pre month car payment, plus paying for food and clothing. I did not spend any money on any luxuries or vacations and it took me about a year to save enough for a down payment and closing costs on a $230,000 duplex.  

I'm sure you're pretty excited about starting this new chapter in your life as well you should be! Nine years after I bought my first house hack (which was the gateway to all of my subsequent real estate investments), I was able to walk away from my 6-figure corporate law firm job and work and live on my own terms. If I did not take that first risk and take that initiative to get started, I would still be sitting at my desk in the office, working 10-hour days like so many of my colleagues and classmates still do to this day!

Vitaliy

@Will Bazile Personally I’m taking advantage of a high yield savings account with a 5.5% return to generate my best return. I thought about a CD but the savings account had more flexibility.

I don't want to tap into my retirement currently but due to some upcoming job shifts I plan on rolling some 403b retirement accounts into my Roth IRA and turning it into a SDIRA and buying a property through that. Of course my understanding is that then it would have to be hands off and I can't live in it.