All Forum Posts by: Zachary Miller

Dawn, thanks for your reply. You make very valid points with regards to the cost. The price range that I am looking at is around 300k, and I am hoping to rent out 2 or 3 rooms. I am not set on doing this by any means. I just want to be moderately knowledgeable on all potential exit strategies.

Hey BP. I am new to the game and have been spending most of my time reading as much as possible here and have learned a ton. I am going to purchase a home soon and start house hacking. I am aware that with this, I will have to pay capital gains tax on the portion of the home that I rented out when I go to sell, while the portion of the home that served as my primary residence is excluded from that. 

I had a idea that I didn't see anywhere, so I wasn't sure if it was possible or not. Is it possible to house hack and, when I go to sell the property, use a 1031 exchange on the portion of the property that was rented while using the capital gains exclusion of the portion that was my primary residence?

Hey all, I am looking to purchase my first house and begin house hacking in the near future. One important thing to note is, due to my living in this house, I am not looking for the best investment property. Rather, I am looking for the best investment that I would be happy living in. 

I was recently perusing the MLS listings and found a 4 bedroom/5bath in a neighborhood that was on my list of places that I wouldn't mind living. Here is the weird thing, the house has been on the market since November 2006. While the house has been reduced in price since it was first, it hasn't been reduced since 2010.

A Realtor that I talked to who had visited the house warned me that it appears like there was some water damage in the kitchen and that the house was in need of a number of cosmetic repairs. I feel like the house is very overpriced at it's current listed price and would probably put in a bid much lower than the listed price if I decide to move forward with it.

My question is mainly, has anyone here purchased a house that has been vacant for a long period such as this and, if so, do you have any tips of things to watch out for? Also, has anyone had any luck with a lowball offer on a house that has lingered on the MLS for years and, if so, would you mind sharing the details of the deal? Thanks for your help. Since I am new to the game, I want to make sure I do my due diligence in all of these areas.

Thanks for the reply. After talking a bit more with someone from the credit union, I learned that they can finance it as long as the appraiser doesn't require that it be fixed before closing. Do you (or anyone else here) have experience with having a property with some defect go through appraisal? The house is in great shape, but it looks a bit worse than it really is because there is a hole in the drywall. Do you know if that is the type of thing that an appraiser may get hung up on?

Hey everyone, I am hoping that someone here may have some insight. I have been looking to purchase my first home recently (to be used for house hacking) and I saw a foreclosure come on the market that is exactly what I am looking for and seems to be at a good price (according to my Realtor at least). Since it is a foreclosure it is being sold "as is."

When looking at the property it appears that the roof leaked in one spot which caused some damage to the drywall on the top floor. The water created a hole in the drywall in one spot of the ceiling no more than 10 inches at the largest point. The damage appears to be caused by a gutter being damaged and then neglected while the house was vacant. I liked the house, so I reached out to my credit union.

The woman who I talked to regarding the mortgage seemed to think that they would not be able to finance the home since they are only able to finance "livable" homes and they were unable to pay for the repairs. My Realtor estimated that he thinks that I could get the roof repaired for under $2000. I should be able to cover that after paying closing costs and everything, but the woman who I talked to said that the appraiser might state that the roof needs to be repaired before settlement. She then seemed to imply that they would be unable to finance the home if that were the case.

Can anyone here provide me with some advice or their experiences in similar situations?

TL;DR I like a foreclosure, the roof leaks, credit union doesn't seem excited to finance it, ideas?

@Derek Carroll thanks for the reply. Do you have any specific recommendations as to how I should analyze potential properties? 

For instance, lets say that I can find a house that, if I were to rent out the entire house, would net a positive cash flow. With my living in one of the rooms, I lose the income from that room. From my initial calculations based on recent house sales and rent prices, it may still be possible for me to have a cashflow of about 0 while living in a house. This would equate to me living in a house for free, a huge savings from my perspective. This would not make a great investment deal if I were to look at it purely as such, due to not having a significant, positive cash flow. 

If I were to factor in the opportunity cost, as you put it, the best forgone conclusion in this case (continuing to rent) would be that I would lose liquidity in some funds used as a down payment, but I would also have reduced living expenses and equity in a home. I feel like I should consider the opportunity cost in my calculations, but I am somewhat unsure of how to do so. I understand that cashflow is not the correct term for methods 2 and 3 listed above, but basically what I was wondering is whether people recommend that I use cashflow or some other metric given my situation. Thanks!

Hey @Carl Simon Fells is a great area. I was very tempted to get a place there, but living in Fed Hill allows me to be able to walk to work. Best of luck to you as well!

@Account Closed thanks for the advice. You make a lot of really good points. I have already started on all of those with the exception of your fourth point and I am taking advantage of this site's resources with regards to learning about that as well. Thanks again!

Hey Jeffery. Thanks for the advice. You bring up a lot of really good points. I hadn't thought about targeting multi's specifically but that is worth looking into further to see if it is feasible. The neighborhood that I am in doesn't have a lot of multi's, but I believe that there are a few duplexes.

As for the exit plan, I had thought about going in with a buy and hold strategy. I believe that the rental income would be able to have positive cashflow if the entire house was rented out. If that doesn't work out, the addition of a new casino in the city has generated a great of development funds which have been directed to this neighborhood in the next couple of years should (at least in my opinion) allow the housing values to appreciate enough to keep up with inflation at the very least if I later decide that my future family's situation makes keeping the house unfeasible.

Hey Morgan! I'm glad to see that I'm not the only one in the area with that plan. Did you have any trouble finding roommates to fill your rooms? I will also definitely look into REA Baltimore. Thanks for suggesting that.

Hey Al. Thanks for the reply. I probably was just over thinking this one. Being that my house will be my largest purchase to date, I have a tendency to over complicate some of these things. Thanks again!