House hack a condo near San Fernando Valley

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House hack a condo near San Fernando Valley

Shounak Rangwala
Member since 2022 · 3 posts · 3 votes

I want to know if this is a good time to house hack a condominium ( >2Bed, 2Bath) in San Fernando Valley given the current market state and the interest rates? I tried to run a rental property report, using the estimated value of the property and the rent charged per bedroom in the locality and a conventional loan and I cannot see making a profit if I house hack the other bedrooms? Are there any one else in Socal who is looking into investing in househacks in this locality?

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Nathan A.
New to Real Estate · Sunnyvale CA and Maplewood, NJ · Member since 2022 · 257 posts · 161 votes
3y

Look at it this way: Would you be losing less money by doing the house hack than you would living where you are currently living? Now is an excellent time to house hack if the house hack lowers your overall housing cost compared to the alternative, even if you aren’t making money on top of the savings in housing cost.

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  • Nathan A.
    New to Real Estate · Sunnyvale CA and Maplewood, NJ · Member since 2022 · 257 posts · 161 votes
    3y

    Look at it this way: Would you be losing less money by doing the house hack than you would living where you are currently living? Now is an excellent time to house hack if the house hack lowers your overall housing cost compared to the alternative, even if you aren’t making money on top of the savings in housing cost.

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  • Ryan ThomsonBusiness Member
    Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    Let's say you are paying 2k/month in rent. Then now is the perfect time to get into house hacking. Instead of throwing that money away every month you can pay down your mortgage and own and asset that will appreciate over the long term. Not to mention if you rent out the bedrooms you’ll get all of the benefits of owning a home AND pay less towards your monthly mortgage than your rent of 2k.

    Thinking about the market… I wouldn’t be concerned for two reasons.

    1. 1. If you’re plan is to scale and buy a property every year or two then you will cost average into the market. Eventually you will buy a property when it is near the bottom for prices. Since you (and no one else who talks like they do) actually knows what’s going to happen this is the best strategy for buying an investment if you continue to buy over the long run. You can’t time the market.
    2. 2. If you wait 12 months and get lucky and the house is worth 20k less now, you will have spent 24k in rent over that time period.
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  • Shounak Rangwala
    OP
    Member since 2022 · 3 posts · 3 votes
    3y

    Thanks Ryan and Nathan

    1Reply
  • Lawrence Potts
    Real Estate Agent · Member since 2018 · 459 posts · 414 votes
    3y

    @Shounak Rangwala,

    House hacking needs to be run slightly different that a traditional rent/BRRRR. You should run your numbers that way as a long term investment since at some point you'll move out of it, but like what @Ryan Thomson and @Nathan A. said, the goal shouldn't be to cashflow. It will almost be impossible in your market.

    However, you pay 100% interest on rent. None of that is being spent to build your network, equity, etc. It's all going to make someone else rich. You should be that someone else!

    If your mortgage is $2,000/month and you can rent a bedroom for $900/month, that's equivalent to getting a $900 raise with your job (if your life expenses does not increase by $900/month. Live like you spent $2,000 in your mortgage and send that $900 into a different account if you have to in order to build the discipline to not spend and reinvest it). Almost like it is $900/month cashflow increase.

    Now you can determine if you can cashflow if you leave. You could live in it for a few years, build equity and let it appreciate, sell it to buy something that does cashflow (4 plex, etc.), and then house hack that and move out when you're ready. That's exactly what I did: bought a "base hit" SFR with the plans to rent out a bedroom, updated it, sold it, used that money into a 4 plex and now house hack that. Plans change over time and having an asset during changing times is better than having no options. If you rent, you have no freedom of choice. You're subject to the owners will.

    Hope that helps answer some questions! Marry the home, date the interest rates. If rates increase, you are owning a fixed rate mortgage, and just wait it out until rates drop to refinance or just run with it. Even if interests increase or maintain over the next 3 years but you gain $30,000 in liquid equity, would it be worth it? Big picture!

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  • Galen Ikonomov
    Member since 2021 · 256 posts · 213 votes
    3y

    The point of house hacking is to decrease your biggest monthly expense and that is housing, not to turn profit. Profit is the icing on the cake. And then you want to know when you leave the property and someone replaces you to rent, how much would you make. 

    It is always a good time to house hack. The market is amazing and the interest rates does not matter when you know how to negotiate. 

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