How to house hack in a hot market?

Question

After hours of researching and trying to decide how to get started in real estate I’ve came to the decision that house hacking is the first step I’m going to take.

The problem I’ve been running into is the lack of inventory in 2-4 unit properties or the sky high price tags on these units. I’m looking to stay around $225k or under.

I live in Metro Detroit (Oakland County) and it seems like the market is slowing down a tad compared to the last few years when prices were rising off the charts.

Doesn’t anyone have any recommendations on how to find off market properties or should I look outside this area?

If anyone has any experience in this market please share your thoughts and/or experiences.

Thank you,

Nathan

James Carlson · Answer

@Nathan Nelsen

You're experiencing what a lot of people here in Denver and Colorado Springs are feeling about small multi-units -- scarcity.

I agree with some of the above. We see a lot of success with our house-hacking clients who do one of two things:

• Find a home with a basement apartment, walk-out basement, etc. Some kind of space that can be separated off. Having a second kitchen is great, but if not, if you're in the right location, you can still Airbnb the heck out of it. 
• Buy a 4br+ home and rent the other rooms separately.

It's not as sexy as buying a duplex, but everyone's looking for a 2-4 unit in places like our market (and it sounds like in Detroit as well), so go where people aren't looking. The above options achieve the same goals.

Good luck!

Renee Bacon · Answer

Yes, same as above.... If you drive around and see some multi-units that you like, type up a quick letter and mail it to the owners, proposing the idea of them selling off-market (saves you both money). I've done this a couple times in my smaller town in St Clair County.

Marketing is the best way to go (check your city's zoning map to see what's even zoned multi-family, so you don't waste $$). I've even gotten some responses from posting 'wanted' ads on Craigslist for a general type of house.

Many multi-family landlords are ready to get out-- you just never know when you're going to find one ready to sell... (plus I think the market is going to dip down a bit in the next couple years- so don't give up)

Good luck!

Justin Alex · Answer

@Nathan Nelsen ....... JD has the right idea if you are looking for multis in oakland county. They are even drying up in macomb county, and detroit can be tricky unless you know what you are doing. I would be happy to show you some mls stuff around town. Also feel free to reach out if you need refferals on loan or construction people. I would say reach out to some wholesalers, but i know for a fact you will have a hard time finding what you are looking for in their inventory. Your other option is running your own targeted mailing campaign.

JD Gunter · Answer

I don't have experience in your market, but Colorado Springs is a very hot market and I've done a number of house hack deals. We also have a shortage of 2-4 unit properties and if someone were to limit their search to properties like that, they would come up short.

Instead, I would recommend looking at properties with a walkout basement, mother-in-law suite, split-level, or even just a separate entrance with street access. A home with a walkout basement and a wet bar can easily be house-hacked.

You can probably search your local MLS for walkout basement, or have someone with a license help you, but some of the other items often don't have search categories. You'll just have to look closely at pictures and go walk through some that lend themselves to being subdivided.

How to house hack in a hot market?

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