I've been reading books on real estate for over a year now and really started to get more serious about educating myself pretty recently. I'm a recent college grad that just started working in Boston. My goal is to successfully house-hack a property to the point where I can live for free while building equity in a property. Unfortunately right now I don't even have enough saved for a 3.5-5% FHA down payment since I'd be an owner occupant.
It's not that I feel like I've hit a stand-still, because I'm still learning a lot of new material everyday. However, I'm at the point where I feel like I generally know enough on how to house hack but:
1) I lack the capital necessary for a down payment
2) I lack the experience of going through the process and dealing with tenants/ lease agreements
Any suggestions on financing a deal like this and/or gaining experience?
@Matthew Roder to give a little more context, my income after all my expenses is only about $650-$700 per month due to my commute, student loans, car etc. I'm more than willing to "just do it" but I'm looking for other strategies to come up with funds. Specifically wondering what creative financing methods might be applicable in order to get to that point faster. I'm saving all of that extra money to get to a point where I CAN do that down payment but it seems like a long ways away.
To my second point, finding tenants isn't a worry of mine considering where I'm looking to do this. It's more the paperwork/ contracts/ background checks that I don't have experience with.
Are you looking to buy in Boston or outside the city? Figure out the area you want to be in and learn it cold. Set up automatic emails on Zillow for that area or multiple areas if you're still narrowing it down.
This is an easy step and will help you know a deal when you see it.
Would it be cheaper for you to live closer to work in a shared place? Do you need a car? Ask yourself if you're willing to make short term sacrifices for your long term goals.
You have to look at what you goals are and figure out anything you can do to reach them. Listen to podcasts, go to meet ups and get involved with people who share your passion for real estate.
Best of luck.
@Shaun Hatton Thanks for the reply. I should have specified, I'm currently commuting from Worcester and I am interested in investing in that area for a few different reasons but I also want to look into Framingham. I've ran the numbers for living closer and I would either be saving the same amount, or saving $200 less each month, depending on rent near the city. The biggest expense I have right now is commuting which is why Framingham would be a good option.
I will definitely be signing up for the auto emails from Zillow. I listen to podcasts every day and continue to read these forums and books. Any suggestion on how to find meet ups? I'm new to BP so there may be a place here that I'm just not aware of. Thanks again.
Check out the Network tab on the home page. There is a meet up in Framingham on 12/15.
Wow, duh.. right in front of my nose. Cheers!
Do you have a family member or someone willing to help you out? With an FHA, a third party not involved in the transaction can "gift" you part of the down payment. Might be something to look at if you're close to making it happen.
@Justin Rank I think I could find someone willing. When you say third party not involved, does that mean that they couldn't live in one of the units with me? I could find someone to gift that extra money needed and let them live in a unit with me for free for some time period? or it essentially works as private money lending where I pay them back with a low interest rate attached? Thanks in advance
mike, you will see me post on almost everything worcester. if you intend to live in worcester and owner occupy, the city offers grant programs for people like you to cover the cost of the down payment, you can either do an FHA 3.5% down loan, and you will see above you can get a gift for that, you can also get cash back at closing for closing costs and sometimes the down payment if the house appraises for higher than the purchase price, there are also 5% down mass housing loans if you have good credit. im in worcester almost every day seeing 3 deckers if you want to meet up
@Brian J Allen I didn't know about the grant program, that seems like a good option so thanks for bringing that up. I would most likely be doing an FHA 3.5% down loan, unless the mass housing loan didn't require Mortgage Insurance. I think meeting up would be great, should I private message you to set something up?
sure PM me, that works, the Mass housing has PMI, but the key is that you can appraise out of PMI, with FHA you need to Refi to get rid of PMI, also PMI is higher for the FHA loan