Is this considered "House Hacking?"

8 Replies

Hi all,

So, I have decided to wait on buying a two family in my area as it is expensive and out of my price range. However, I would like to move out around 26 (I am 24). I am from NJ and have been on the fence of potentially investing in a 2 bedroom apartment/condo in Union City/West New York/ Jersey City/ Hoboken area. Everyone usually suggests house hacking but with a two family home. Would buying a 2 bedroom and getting a roommate still put me on the right path for smart real estate investing? Thank you so much!

@Ellen O'Neill

Don't focus on the "HOUSE" part of "House Hacking" too much. The main idea is to buy a property that you can use as an investment as well as your primary residence. If you can rent a room and make enough to cover or even exceed your own housing expenses, you're way ahead of most people! Just my thoughts.

Best,

I agree with Andrew. In addition to his comment, there are FHA loans that can help you get into a 1-4 unit with as low as 3.5% down. I do believe your FICO must be a 580 or greater, and sufficient debt to income. The 203k loan is an FHA loan that allows you to bundle the construction costs into the loan and still have that low down payment. With this strategy you could purchase a distressed property, renovate it, house hack the property and potentially have some equity at the end of the day. Good luck to you!

Awesome thank you! I am going to continue looking into all of that! :) 

On top of my above question though - is it possible to even make a very low sum of profit from this? With house hacking it seems that multiple units allow for more cash flow but with just one roommate it seems less possible. Unless I have them pay the entire rent but i'm not sure that would exactly workout. Or, would this be a venture that just allows me to live on my own without giving someone else my rent money? 

Thanks again! 

@Ellen O'Neill it would help you live with a lower cost of living, while hopefully building equity. In more expensive areas, house hacking will net you lower monthly expenses vs. renting, but may not bring cash-flow.

 Additionally, if you live there for two years, and have good appreciation, you can take up to $200,000 in gains on your home with no tax on it.


This article explains it:

https://www.nolo.com/legal-encyclopedia/the-250000...

Good Luck!

@Ellen O'Neill

Hi Ellen! 

To be honest in those towns in Hudson county - buying a two bedroom and having a roommate is a great idea but unless it’s a distressed property that you renovate and then live in/rent out- the likelihood of the income exceeding your monthly expenses is low. 

It is still a very good idea! Especially since buying a 2 bedroom apartment is generally cheaper than buying a multifamily in most cases. 

Originally posted by @Andrew Fredrickson :

@Ellen O'Neill

Don't focus on the "HOUSE" part of "House Hacking" too much. The main idea is to buy a property that you can use as an investment as well as your primary residence. If you can rent a room and make enough to cover or even exceed your own housing expenses, you're way ahead of most people! Just my thoughts.

Best,

 I agree with this... if you can have the person who is paying rent cover a good portion of your expenses.... that's a solid win.

@Ellen O'Neill yes I think that is viable and as mentioned above as long as someone is contributing to helping you pay of the mortage you are ahead of the game. Charge the going rate for a bedroom in your area and put the money you save into an account to buy that 2 family (or something else). Then when you are ready to make the move, rent out the condo .... just make sure that wherever you buy allows you to rent it out.