Omaha, NE · Member since 2017 · 14 posts · 4 votes
Hey guys! I am 20 years old and I want to purchase a single family home to house hack with. I'm in Omaha, Ne and I currently live in an apartment. I want to buy a three bedroom house and have two roommates cover the majority of the rent. I would pay maybe $100 per month. Using the BP Mortgage Calculator I figured a house in the $145,000 price range is what would be ideal. I calculated a payment of roughly $1,000 per month after mortgage, taxes, and insurance. My question is besides the $5,000 for a down payment on an FHA loan, how much is a good amount to have saved up before purchasing the house, and how much should I save per month for cap ex? Would love to hear everyone's feedback so I can better plan for this!
Rental Property Investor · Seal Beach, CA · Member since 2015 · 132 posts · 187 votes
7y
A thousand ways to skin this cat so take everything I'm about to say, take with a grain of salt. 1. Although unsolicited, I would not even consider purchasing a house until I've paid off all my bad debt. i.e debt that isn't making you money. Credit card, student loans, etc. The reason I say this is if a bad day comes along, you don't want to worry about paying off your bad debt and a house payment. Moving on...
2. Have at least 3 months of savings in the bank, hopefully, more outside of any housing expenses to cover.
3. Now finally to your question. Well, a lot depends on the house you end up buying. Is the roof 15 years old, is the HVAC on its last leg, does the electrical panel need updating, has the plumbing been touched in the last 50 years? How old is the house? As a rule of thumb on my rentals, I consider 45% of the rent as "gone" before my mortgage. So using your $140,000 house I'll take a stab and say that would rent around $1,400 a month. That means you should expect to pay AT LEAST $630 a month in insurance, taxes, maintenance, and repairs. Well actually maybe a bit less since you don't have a property manager, so make that an even $500 per month. TImes that by 6 months and your talking about needing ~$3,000 if nothing goes wrong. As I write this, I'm not loving my answer but it should give you something to think about.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
7y
@Christian Wilson In general I recommend to my clients who house hack here in CT to have enough money for their down payment and then 6 months of their PITI (principal, interest, taxes, insurance) in reserves.
The key is over time and when you live in the property to keep saving money because any money beyond that 6 month reserve is money you can then invest. Point being, do not take your foot off the gas pedal once you close and move in to your house hack. Use the unique situation of having minimal living expenses to save for future endeavors.
Omaha, NE · Member since 2017 · 14 posts · 4 votes
7y
@Michael Noto Thank you for the advice! I was only planning on saving around 3 months of total expenses with everything I have in my budget. I've estimated that with a $145,000 house the PITI would be around $1000 per month but my expenses total are $1600. So I should save closer to $6000 rather than $4800?
House Hacking Specialist · Denver, CO · Member since 2016 · 411 posts · 396 votes
7y
@Christian Wilson if you were not already bought in through some of the great feedback you received in this post, I would highly recommend reading Scott Trench's book Set For Life. I actually just closed on my first house hack in Denver, CO.
Best of luck. Looking forward to seeing your success story in the forums.
Separately, I actually have rental in Omaha I bought 2 years ago when I lived there for $145,000. My all in was about $15,000 w/ 5% down. Monthly mortgage is $1050/M.