Anything I should be looking out before getting first HouseHack?
I am looking into getting my first house hack deal, I am eager to get into real estate and house hacking seems like my best option at the moment. I've consumed countless hours on content like books, podcasts, videos, etc., and I am ready to pull the trigger. I am looking into duplex's or SFR, small-multi doesn't seem too common in my area so I'll probably end up with a SFR. Any tips on what to look for in your first househack, common beginner mistakes, any tips on getting pre-approved? Anything helps !
Hey @Justin Segarra-Santiago house hacking is a great way to get started in real estate investing!
Study the requirements for an FHA Loan like a book and make sure to set yourself up for success. Examples would be building up your credit, getting the most recent tax returns for the last 2 years in the same field, building up capital for the down payment, closing costs and 6 months in reserves so you can use as much of the rental income from the other units as your own income when you getting qualified. Let me know what questions you have. This isn't legal or lending advice, and you should seek professional assistance.
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Real Estate Agent Ohio (#2021008169)
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Have you thought about buying a duplex or a home with a legal suite?
@Joshua Janus Thanks for the advice! how would I use the rental income from the other units to qualify?
@Theresa Harris Yes I have as well as detached garages but those seem to be a little over my price range, I am barely 20 years old and do not have tons of cash, I have about 20k saved up.
#2 General Landlording & Rental Properties Contributor
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Originally posted by @Justin Segarra-Santiago:@Theresa Harris Yes I have as well as detached garages but those seem to be a little over my price range, I am barely 20 years old and do not have tons of cash, I have about 20k saved up.
Understandable and every market is different in regards to prices. I think you are smart to get started early.
Talk to your lender about that as I am not one. But you can use the fair market rent from the other units as your own income to help qualify.
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Real Estate Agent Ohio (#2021008169)
- 614-502-5316
- http://linktr.ee/joshjanus
- [email protected]
- Podcast Guest on Show #1
@Justin Segarra-Santiago A few points to help you along your path. First is when you go look at a property the most expensive parts of the house are the ones you do not see. So ask yourself the following questions:
1. How old is the HVAC?
2. How old is the roof?
3. Does this house have Vinyl windows or old wood windows that need replaced?
4. Does this property have updated Electrical? Are all of the outlets 3 prong? a 2 prong outlet is a flag that there could/probably is electrical that needs updated. 200amp service with breakers if you are trying to keep things simple (if you have natural gas powered hvac and stove you could get by with less) Knob and tube electric would be a cost to upgrade
5. What kind of plumbing does the house have? PEX, PVC, Copper, Steel, Cast Iron? A combination of PEX and PVC would indicate updated plumbing.
Things like flooring and paint and cabinets are what too many people focus on but those above 5 areas are the expensive ones that will turn a house hack into a house of horrors.
For the financing piece, most lenders will use 75% of the rents of a tenant to offset debt to income ration. This is likely more of a concern for you with house #2 vs house #1. If you are doing an FHA loan your downpayment should be 3.5% to 5% so save up that money. If you live in a more rural area you could use a USDA loan for that first house with 100% financing.
Best of luck and good on you for asking questions so you don't learn the hard way!
Mike