Young couple looking to house hack

47 Replies

Hi everyone! My husband and I graduated from University in the Spring, we both have full time W-2 jobs, no debt, a 780 credit score, about $25k saved, and live in Salt Lake City, UT. We’d really love to house hack, but are unsure of how to find the best deals or if we even have enough to get started. Any advice for us newbies?

Hey @Heath Ryans ! Great questions! We’re looking to live in a until of a multi family complex. Ideally a duplex, triplex, or fourplex. It seems they’re pretty scarce or we’re just not looking in the right places. What’s your expertise?

I would do an FHA with 3.5% down. What area are you looking? Anywhere in the salt lake valley? I scan listings everyday. Come across a good one once every few weeks. I'm happy to foreword the hotsheets If you would like. Another good idea is keeping your eye out for homes with basement apartments or mother in law.

@Cherie Orellana that's what we've been thinking about, but we are worried about the mortgage insurance, closing costs, etc. and are wondering if it's really the best option? We've even looked into a 203k depending on if we decide to buy more of a fixer-upper. Do you know much about those? We're looking mostly in South Salt Lake, North Salt Lake, and anything that's East of I-15 in the Salt Lake Valley. I would love to receive the hotsheets, if you don't mind. We are also keeping our eyes out for basement apartments and mother-in-law.

@Steffany Jensen I always recommend going to an REI meetup in your area. Someone might know of a deal. Beyond that, get out and drive around neighborhoods you would be interested in. Make note of all the multi units in the area. You can buy a list from listsource or another site and comb through it if you dont want to drive everywhere. From there, mail to the owners and see if they would want to sell. Be upfront about what your looking to do. They may be willing to work with you, and you could possibly secure owner financing. To get a great deal your going to have to put in some legwork but it will be very much worth it.

I'm trying to move into it as soon as possible. Im pursuing a 4 unit deal right now, with hopes of getting more of the portfolio. Wholesaling is a means of learning the market and building confidence.

House hacking is the best way to get started in my opinion.  I  bought a duplex that I'm currently house hacking, gained some experience and were now looking at 50+ unit deals.  House hacking provides experience, the ability to live for free, and the confidence for the next larger deal.  I graduated from the U, Salt Lake is a great market in my opinion.

Hey @Steffany Jensen ,

I'm not sure if you have already listened to it or not but there is a bigger pockets podcast about a young couple in Utah County that have built up a good size portfolio. You and your husband would find a lot of what they talked about very helpful. It's show #288 and was posted on July 19th.

Best of luck!

Originally posted by @Steffany Jensen :

@Cherie Orellana that's what we've been thinking about, but we are worried about the mortgage insurance, closing costs, etc. and are wondering if it's really the best option? We've even looked into a 203k depending on if we decide to buy more of a fixer-upper. Do you know much about those? We're looking mostly in South Salt Lake, North Salt Lake, and anything that's East of I-15 in the Salt Lake Valley. I would love to receive the hotsheets, if you don't mind. We are also keeping our eyes out for basement apartments and mother-in-law.d

Steffany, I have been house hacking for the last four years in the valley. I wouldn't worry a ton about PMI and closing costs etc. Instead I think a decent cost benefit analysis would be to look at what the mortgage would cost while house hacking vs what you would be paying in rent. In SLC it's going to be super difficult to find anything that the rest of BP would consider a good cash flowing deal...at least as far as rules of thumb like the 1% rule and at least on the surface analysis and before adding value or raising rents to market rate or even waiting for them to naturally climb.

It can seem like you are going against all of BP land but in my situation it has worked out very well. My portion of the mortgage is about $700-$800 per month and I live in an A+ neighborhood and my home has gone up in value tremendously. Now, you should definitely get as good a deal as possible but don't let it stop you if you aren't "cash flowing $200 per door" would be my advice. I would also say find something where you can add some value and raise the rents but as long as you are in a pretty good neighborhood and you hold for the long term your rents and value should go up over time in spite of any short term dips. The economy, job growth, population growth, etc are all tremendous in UT. That combined with the limited land supply make for obvious value increases over the long run in my opinion. 

Also, I just finished reading Scott Trench's book, "Set for Life" and it's a fantastic read. I highly recommend it for you and your husband if you haven't read it already. The main point I got out of the house hacking advice Scott gave was that it's more about reducing your #1 expense, housing, so that you can increase your savings rate and thus your investing. 

I am also looking to house hack again...this time  a fourplex. I see all the 2-4 units in Salt Lake County and I analyze them daily by running them through the BP rental calculator and looking on Zillow rents for rents in the area as well as running the address through Rentometer. If I can find a fourplex where I will be paying 0-$600 after rents from the other three units I will most likely jump on it once I get a few other details ironed out. Ideally this will be a four plex in a great area (likely $500-$800k), value add, an ability to raise rents and bill back some utilities to the tenants. Once I make these theoretical improvements and raise rents I will move out and the rents from the unit I move out of will then cover the mortgage plus a nice buffer. This likely will be cash flow break even when including 10% vacancy, 10% maintenance, 10% property management but I don't need anything above the mortgage as I have a great job that I enjoy so I will just stash everything and build up a nice reserve on top of what I already have. I don't think I ever would have bought my current house had I purchased based on popular BP cash flow analysis and I would have missed out on my tenants paying over $50k towards my mortgage, a much much lower housing expense than what I would have been paying, and a very significant amount of equity growth. 

Just make sure you have plenty of reserves and I think you should be ok. 

@Ryan E. Thank you so much for the information. It’s super helpful. Yeah, compared to most deals on BP investing in the Salt Lake Valley doesn’t seem like a great idea, but like you said, the population growth, great economy, and business growth makes it a great long term investment opportunity. Honestly, with some of the numbers we’ve been seeing it seems like a great opportunity even if we aren’t making positive cash flows. If we could just cut what we’re paying in rent right now in half, we’d be saving $800 every month, which would be a huge win. Have you looked on KSL? I’ve seen quite a few off market deals recently that you might want to jump on. We’re looking to close sometime after the new year, around January or February, so we’re passively looking. If you come across one that you’re not particularly interested in, feel free to pass it our way :). We will definitely read that book though! Thanks again for all the info! Oh, one more question for you, do you have a lender you trust? Would love to use someone who’s familiar with house hacking and is trusted by another BP member.
Originally posted by @Steffany Jensen :
@Ryan E. Thank you so much for the information. It’s super helpful. Yeah, compared to most deals on BP investing in the Salt Lake Valley doesn’t seem like a great idea, but like you said, the population growth, great economy, and business growth makes it a great long term investment opportunity.

Honestly, with some of the numbers we’ve been seeing it seems like a great opportunity even if we aren’t making positive cash flows. If we could just cut what we’re paying in rent right now in half, we’d be saving $800 every month, which would be a huge win.

Have you looked on KSL? I’ve seen quite a few off market deals recently that you might want to jump on. We’re looking to close sometime after the new year, around January or February, so we’re passively looking. If you come across one that you’re not particularly interested in, feel free to pass it our way :).

We will definitely read that book though! Thanks again for all the info! Oh, one more question for you, do you have a lender you trust? Would love to use someone who’s familiar with house hacking and is trusted by another BP member.

Actually I do know a mortgage broker! His name is @Shane Barker . He’s one of my best buds and he’s a very trustworthy and honest person. I talk to him at least a 2-3 times a week and he’s always answering my questions about mortgages. PM me and I’ll get you his contact info. 

I would love to see any deals you are seeing on KSL. I’m actially really glad you mentioned KSL because that’s one area where I’ve been slacking big time in looking for deals. I’ve been thinking real hard about doing a direct mail campaign with the goal to acquire one rental, possibly to house hack, every 12-24 months. Anyway, would love to chat more with you and your husband! 

@Steffany Jensen I’m in the same boat as y’all but I‘m in the Atlanta market, the hardest part to me seems to be finding a deal that works. I’m attending my first REI this weekend and I’ve reached out to a few wholesalers, hopefully these strategies will yield good results! Good luck to you two!

@obed Bermudez My understanding is anything in regards to the property address So either side. Or any unit up to a four flex, exterior, landscape. FHA required repairs always come first like hand rails, mold, lead based paint.

If there are not substantial repairs needed or you wanted to save money by doing some items yourself and don't want to use an approved contractor you can use a regular FHA loan and ask seller to pay some concessions towards some items. Such as a roof allowance or carpet allowance where money goes into escrow and paid to the carpet company or roofing company directly after closing and work is done.

@Steffany Jensen contact a realtor and have then send you alerts for new multi-unit listings. You can also look to get a preapproval letter from a lender. This could be FHA or a portfolio loan. My gf and I house hack a duplex and it's the best thing I could've done. I got a portfolio loan from a local credit union, 7/1 ARM (adjustable rate mortgage) at 3.375% for 7 years, adjusts after that (max possible interest rate is 8.375%). I put 10% down on purchase price and don't have to pay PMI/MIP.