Renting out my house to house hack a multi-family

3 Replies

Hello. This is my first post aside from introduction. I assume I'm not the first person to think of this, but don't see an exact match anywhere. That said, I apologize if this is a duplicate topic. Anyway, here's what I'm thinking:

I bought a house in NJ just over a year ago. It's 3 bedroom, 1 1/2 bath in a nice lake community. Shortly after moving in my son was born and daycare came into the picture. Anyone who has put their kid in daycare can tell you this is almost like taking on another mortgage payment. We can afford to live in our home, pay all the bills and eat... but its paycheck to paycheck at this point. I looked for ways to improve our situation and inevitably landed on real estate investing. 

I can ramble on about thought process and plot development but I'll get right down to it. I think the best move for me is to "house hack" a multi-family home, and rent out our house.

The monthly mortgage on my house with taxes, insurance, pmi, etc come out to $2000 per month. Based on comps for the area it looks like my house could potentially rent for between $2100-$2300 per month. 

The tricky part as I see it is how to get a mortgage on the multi-family (probably FHA) before I can show any rental income from my house... since I kind of need to live in it until I can move into the multi-family. It feels like a chicken or egg scenario... can't do one without having the other. We don't have lots of money or high income to entice a bank to lend us a mortgage on another house without selling the first...which is an option but not my favorite one.

Does anyone out there have experience breaking into buy and hold investing this way? 

Advice would be seriously appreciated. Thanks!

@Michael DeFilippo it looks like you have two options. One is to find a lender that will consider this income and be able to buy a second home with. Or the other is to sell this home and find a multi family to buy and have the contingency that when you buy this new home it is based off of you selling this previous one. But of course there are several variables have to take care of in this scenario as well.

It sounds like you’re house-poor. Why hang on to a house that has you on the brink of financial chaos? I know, there’s lots of emotion attached to first homes, but that will keep you poor.

If there’s any equity on the house, do what Johnathan Boyle recommends. You’ll be in a better financial position with a nice down payment to househack in a multi family. Buying a MF is a competitive thing, so a good down payment and funds to make your offer more competitive (like asking for no seller contingencies or having a conventional loan) will go a long way towards getting you into a living situation where you may have some breathing room.

Thanks guys. I guess I was thinking if I could get a tenant into my house and cover expenses I could build equity and refinance down the road, or get a home equity line of credit. I suppose as a beginner I need to learn to recognize when its time to hold and when its time to sell. The first priority is to get into the multi-family. Keeping my current home is secondary. 

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