House Hacking a Multi-Use?

Question

So today I was talking to my mentor and we were considering different real estate strategies to expand my horizons.

He mentioned mixed-use properties, which I honestly have never considered as an investment. Since my strategy would definitely involve house hacking, I was thinking about house hacking with a mixed-use property.

It could be interesting to evaluate as a strategy, but only if I can access financing with a low downpayment.

How would that work from a financing standpoint? Any lender or investor has experience on this?

As usual, hat tip to @Bruce Woodruff  who always nudges me to explore something new and learn more about it.

Fabio Selmi · Answer

Kyle, thank you for your perspective.

I will surely use house hacking to get started in real estate, no doubts about that. The ADU trick popped up in my latest conversation with the brilliant @Bruce Woodruff.

Jonathan Greene · Answer

You can house hack a mixed-use commercial property with an owner-occupied loan (and FHA) if the residential square footage is 51% or more. It is completely doable and a great option because you get longer tenancies with the retail.

German Fernandez · Answer

Just wondering if you found any luck with this strategy and what barrier you may have come across? I'm looking at something similar.

German

Kyle Hoffman · Answer

The house hack is one of the best ways to leverage financing to get started in real estate investing or expand a portfolio. I'm a realtor in the Indianapolis market and work with new investors who look for duplexes and single-family homes with ADUs. Fannie Mae's reduction of the down payment requirement for 2-4 units to just 5% for conventional is a game changer and has allowed house hacking to be more attainable. You can also use FHA with 3.5% down as well although may be harder to win in a more competitive market. The multi-family house hack can also work to increase cash flow other than just renting out spare bedrooms.

Stephen Montez · Answer

Hey Fabio! Definitely a creative idea but at the end of the day if you live in one part of the property and are renting out another - that's a House Hack! So absolutely viable if - like you mentioned you can get creative in terms of financing the deal. I'd repost this in one of the "Real Estate Strategies" Forums or in the "Mortgage Brokers & Lenders" category just so this is post can get in front of the right eyeballs. Good luck!

House Hacking a Multi-Use?

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