Turnkey as a House Hack

22 Replies

Hi, my name is Dominique,

I am both new to bigger pockets and to real estate investing. I am working on trying to get my first property. I am currently working on a contract nurse, traveling the country. Right now I am a renter myself, I have good credit but not much savings. I was thinking to house hack my first property however, I am really uncomfortable with major repairs and bad neighborhoods. I also do not have a specific area I am searching for I am from Texas so I was thinking Houston but I have had trouble finding deals. I am open to other cities with good deals.

My question is weather or not working with a turnkey company is good for a house hack. I know that they are usually higher priced but they do not need repairs and are usually A-B properties. My plan is to purchase a multifamily, do an FHA loan and live in it for some time while saving up to for another.

Does anyone have suggestions or concerns . Also if you could recommend some good turnkey companies, I  would appreciate it. Thank you.

Dominique Colas

    Househacking usually means a multifamily, as a single family it’s really just a primary residence and it won’t really cash flow if you are living in it

    This post has been removed.

    I know it won't cashflow while I'm living there but i hope it will after one year of living there.

    Dominique Colas

      This post has been removed.

      Originally posted by @Account Closed :
      Originally posted by @Dominique Colas:

      I know it won't cashflow while I'm living there but i hope it will after one year of living there.

       Chances are in todays market nothing will cash flow @ 3.5% down.  You can bank on that.  If you find one that does you are a SUPERSTAR!

      Oh ok, I didn't think of that. But would a house hack be beneficial, if not, what are your suggestions?

      Dominique Colas

        @Dominique Colas

        Turnkey is a good idea if since you say you're not into repairs and you're also a first time investor. If you vet out a good turnkey provider, you can feel more secure in that they did well in preparation of the property and they may even offer management services for you. 

        As for the prices being higher, that's relative. You should expect to pay close to what the market value for the home is. 

        Brandon Johnson

          Kucy Ariyoshi that couldn’t be further from the truth. While good deals take some work to fine there are properties that will cash flow on the market. I don’t know anything about the LA market but do about Louisville, Minneapolis and some markets in Texas.

          I would not look to a turnkey company for a property. Find a realtor and consider using and FHA 203k loan that rolls in rehab cost. You won’t be able to do much yourself but sounds like you don’t want to anyway!

          Jordan Moorhead, Real Estate Agent in MN (#40542303)

            @Dominique Colas read my post above and let me know if you have any questions. Don’t let someone tell you that you can’t househack, people are making it work in EVERY market.

            Jordan Moorhead, Real Estate Agent in MN (#40542303)

              This post has been removed.

              @Jordan Moorhead

              I have heard of the FHA 203K loan bur i didn't consider it because repairs make me nervous. But after giving it some thought I realize that it could be a good option since the repair cost are included in the loan. I can also have some forced appreciation, bring the value up. Thanks for the advise.

              You said you know a little bit about the Texas market. How familiar are you with Houston and the outskirt cities? Do you know any good realtors?

              Dominique Colas

                @Account Closed

                In my family home, I have had very negative experiences with bad contractors so that is what really erks me about renos. If I can find a good deal with FHA 203K loan and a well recommend contractor, I would consider a rehab property.

                This is just very new to me and I am a nervous that something may go wrong and I will not know what to do. Thanks for you responses, they did help me to think about the options available.

                Dominique Colas

                  @Dominique Colas @Jordan Moorhead is correct you should  be able to find properties that cash flow on a house hack with only  3.5% down (after you move out) or you have to consider your FREE Rent as your cash flow while you live there.   Every client of mine cash flows on their house hack.  

                  My only recommendation is that you seek out a lender that will do Freddie Mac's 5% down multi family loan. This will allow you to start with 5% instead of 3.5% on your first home but then buy 3.5% on your second. Freddie does not allow this if you do the FHA first.

                  I know several Texas lenders who can help you.  PM me if you want a referral.

                  ~Tim

                  Tim Swierczek, Lender in WI (#103522) and MN (#103522)

                    @Tim Swierczek I did not know about the 5% down loan. Does it have same requirements as the FHA loan(owner occupancy). This might work better for me if I don't have to live in it. I can be less picky about the location and I ca continue to do my contract travel job for a while instead of settling down really quickly. I will PM you for a referral. Also, how experienced are you with the Houston market, do you know any investment savvy realtors?

                    Dominique Colas

                      @Dominique Colas the great thing about Bigger Pockets is that if anything goes wrong we are all here to help!

                      @Account Closed the duplex I live in would cash flow $400 a month if  I moved  out.  It currently cashflows with me in it because I airbnb a room in my unit. I bought for $177k and put $15k in for reno and down payment. 

                      FHA 203k loans don't require you to swing a hammer nor watch your contractor work.

                      Jordan Moorhead, Real Estate Agent in MN (#40542303)

                        @Dominique Colas you do have to live in it but it still works great with the right property.  In our market that usually means a larger property with at least one 3bd unit, you would occupy the 2bd with a roommate.  It almost never worked on a duplex that has 2 bed in each unit and newer works of one unit is 1bd. I'm guessing one of my LO friend can help you find a good Realtor. 

                        Tim Swierczek, Lender in WI (#103522) and MN (#103522)

                          House hack to me, looking at your situation and expertise is to buy a 3-4 bedroom house that is set up good for roommates.   You network everyday with  people in your field and have lots of access to them.  You also know the HR and recruiting people in your field.   I would think for example if you can find one...a 4 bedroom 4 bath house might be ideal for you or something like a 3bed house with a garage apt.   Live in one bedroom and rent the other 3.   If you buy at $200,000 and can rent the bedrooms at $500-$600/month you are probably in good shape.

                          I don't often see for example a turnkey 4 unit...or even that often a 2 unit....because most often at least one side is rented or all the units are rented already....typically that means some repairs or make ready or upgrading when they move out.

                          If you ever think about Dallas let me know.

                          House hack.

                          Get the best financing you can FHA, Fannie, VA if you qualify. Multi family is a great choice, if you can find one you like.

                          If you can only find a SFH, get a roommate. You re single and travel. You can get really close to cash-flowing in that scenario.

                          If repairs are a concern, buy a home warranty, it will cost you a few bucks up front, but will take care of any issues that come up. 

                          Lesley Resnick, Real Estate Agent in FL (#sl3322996)

                          You can buy a move-in ready property and house-hack. Working through a turnkey operator is probably not your best option.  You can self-manage and just hire a handyman as needed for repairs and maintenance requests. 

                          As others mentioned, you can get great financing for an owner occupied 1-4 unit. You're in Texas, which is a phenomenal market, so start with a neighborhood you're comfortable living in an you're likely to find like-minded tenants/neighbors.

                          Originally posted by @Dominique Colas :

                          @Account Closed

                          In my family home, I have had very negative experiences with bad contractors so that is what really erks me about renos. If I can find a good deal with FHA 203K loan and a well recommend contractor, I would consider a rehab property.

                          This is just very new to me and I am a nervous that something may go wrong and I will not know what to do. Thanks for you responses, they did help me to think about the options available.

                          Here is the thing, as a landlord there will always be things that go wrong.  The important thing is adapting to them and going forward.

                          In a class a/b neighborhood, you will have extreme difficulty finding any home that will easily cash flow.  And those that do come on the market that do will be under contract in 24-48 hours.

                          One question I would ask is do you plan on moving soon?  and do you have enough w-2 income to qualify?

                          If you are on short term contracts, I don't know how underwriters will view your income towards qualifying for a home.  As an example I know people who are self employed have a lot of difficulty qualifying for loans. Its something I would ask a mortgage broker.

                          As far as house hacking goes, I am very certain that Dallas properties will be worth substantially more than they are now in good neighborhoods 10 years from now.  I don't know if they will be worth more 1 or 2 years from now.  If you have a longer time horizon, I think it will be fine, even a great idea to buy a duplex, and rent out the other side, and/or possibly even individual rooms.

                          Bart Hedgcock

                            Thanks for the advise @Bart Hedgcock . i had not thought about having issues with financing. I do plan on moving and working permanently at a full time position. I am a nurse so it should not be too difficult for me to find a job. My contract work is only for a short time while I travel. If I plan on getting a FHA owner occupied loan, I will be moving into the home. As far as the w-2 is concerned, that is something I really need to talk to a broker about.

                            Dominique Colas

                              Originally posted by @Dominique Colas :

                              Thanks for the advise @Bart Hedgcock. i had not thought about having issues with financing. I do plan on moving and working permanently at a full time position. I am a nurse so it should not be too difficult for me to find a job. My contract work is only for a short time while I travel. If I plan on getting a FHA owner occupied loan, I will be moving into the home. As far as the w-2 is concerned, that is something I really need to talk to a broker about.

                              Oh, yeah, I am sure you will have no problem finding a job as a nurse.  I hope my comment didn't come across that way, All I was saying was that stated income/contractors will have different underwriting standards than those having w2 incomes

                              Bart Hedgcock

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