Convincing friend to House-Hack and is it smart?

5 Replies

I'm itching to get into real estate by house-hacking but I can't afford anything by myself here in Nashville. I can afford some surrounding areas but I don't want to live in these places. My plan is to get a good friend who is also wanting to buy a house (at least that's what he's saying) to join in on a MFH house-hack with me. We would both be on the mortgage to qualify for house in the 200k-250k range. I was pre approved for a 5% conventional primary home loan in the past and he has zero debt whatsoever so I think it wouldn't be terribly difficult to qualify for this, and even if we weren't, we could just use an FHA loan.

I briefly brought it up a few days but he didn't seem too interested. The only issue he posed was that he just entered his first real relationship with this girl, they've been dating for 3 months, lol. He said that may "mess" things up. I didn't have a chance to rebut before his GF came and the conversation just sizzled. I want to bring it back up and actually provide numbers on WHY it's smart for us to partner and how we can live for free or even make a few bucks per month. If he's really planning on buying a house he'll be spending far more each month than by partnering with me.

So here are my questions:

1) If we're both on the mortgage with, let's say, a 5% conventional primary home loan, do we both HAVE to live in the house full-time or can just one person (me) live there full-time? I know that if he has his mail sent to the house then there will be zero issue even if he does eventually move in with his GF but I want to give him peace of mind.

2) What's the best way to show the numbers to him? Just pull up a possible MFH on and go through the process of analyzing a deal on paper? Any tips on this as I don't want it to look like I'm trying hard to sell him, y'know?

I want him to know that this is not only a viable option but a financially prudent one as well.

1) Only one of you have to live in the property to get owner financed. 
2) They say you can lead a horse to water... Your friend honestly doesn't sound interested. He gave you a no the first time when he mentioned the GF without having to say no. I would find someone else to partner with.

Originally posted by @Waylen Herdman :

@Ronnie Hutchinson

Even if we're both on on mortgage with an FHA loan, only one of us needs to actively live in the property?

Don't think any of my other friends will be too interested. I'll ask around.

With FHA both of you have to live in the property for 12 months. With 5% conventional, only one. But this is lender specific so I would recommend you just fill out a pre-qualification with your local lender or ask a broker.

If your friend needs convincing he is not the right partner. You are either in or out and if you need to think about it that’s fine but if you have sell the idea it won’t work. Your friend has to want as bad as you.