House hacking for a first time home buyer

16 Replies

I'm 22 years old and graduated from college in May, 2019 - now looking forward to buying my first property within the next 6 mos.

I have narrowed my criteria (location, property type: duplex, and budget). I am now searching for deals and trying to understand the analysis process for "house hacking". The idea is to use an FHA loan to finance the property and create value by fixing up while living as a primary residence - seems like a house hack + BRRRR scenario.

Looking for advice on getting started with analyzing deals and understanding any important indicators to look out for.

Thanks in advance!

@Zach Wright

Don't pigeonhole yourself into an FHA loan. If you have less than stellar credit, then that will be your best option. If you have decent scores (720+), you should look into conventional loans. Yes FHA does 3.5% down, but there is also the 1.75% UFMIP which puts you at 5.25% down. There are conventional loans that do 3% and 5% down.

There are tons of indicators to look out for. Too many too name. I'd suggest reading a few books and listening to podcasts then taking that newly-gained knowledge and start analyzing deals in your area.

@Bob Okenwa

This is great advise - thanks for taking the time to comment!

I agree - seems like FHA loans are generally targeted at first time buyers and new investors, but I will now research other options with comparable down payment amounts.

I have been listing to bigger pockets pod for about 6 months now and am becoming more familiar with real estate terminology. I am still struggling to get over that “hurdle” of feeling comfortable and confident with a deal. Maybe this just means that more analysis is needed, but don’t want to get stuck in analysis paralysis.

Any advice based on your experience for feeling great about committing to a deal?


@Zach Wright

Hey man, you're on the right track. I bought my first duplex at 23 with an FHA loan, did the rehab and refi'd into a conventional loan, and used an FHA again on a 4plex a year later.

If you're going to go FHA and you're planning on rehabbing to force appreciation I'd strongly encourage you to consider using the FHA 203(k) loan to fund the purchase + rehab, so that all you're putting into the deal is the down payment.

Whichever option you go with (FHA or conventional), just be sure to do have a contractor do the walk-through with you before you buy it so you have a solid idea on exactly how much you'll spend and how much it should be worth in the end, to make sure you can refi out.

Hope this helps!

This is awesome advice! 

I wasn't aware of the FHA 203(k) load - I will look into this option. Seems like this will require less money down and may put me in a better position to rehab the property.

Really appreciate the input!

Hello @Zach Wright !

Congratulations on graduating! My partner and I bought our first house hack/BRRR in May and are in the process of getting tenants in here now (we are renting 3 rooms). Ill try to share a bit of what I've learned through this process.

-You need cash. You need money for not only for the downpayment but also for closing costs (we had the seller cover most but we still had a tiny bit left), rehab (if you don't do a 203k loan) materials and labor, plus your living expenses (we barely cooked at the beginning since we spent every waking moment with workers and working in the house ourselves so we bought food everyday, we also didn't have a kitchen since we completely gutted the one that was here, and your responsibilities won't stop so you still have to pay credit cards, insurance, internet, etc)

-We became BP pro members to use the calculators to analyze deals and we used the heck out of them. We looked at houses in our targeted neighborhoods and ran numbers in different scenarios. What if your rehab goes over budget? Over time making your 'holding costs' higher? What if your rents are lower? What if your appraisal after the rehab is lower? And we finally decided on the house that we could work in all scenarios. In a house hack your profits will be lower when you live in the house, you might even be negative (like paying rent) when living in the house but should be in the positive when moving out. If you are in the negative, as long as you are less than if you were renting (lets say you rented an apartment for $2000 and now with the house hack you pay $500) then it's pretty positive in our book. 

-Go to local REAs, read, listen to podcasts, and ask questions. I have gone to 2 local REAs and have loved it! Ive met some amazing people doing similar things to me. Those monthly meetings have become a great resource of information for me. Ive also read the book on Rental Property Investing by Brandon Turner, the book on Managing Rental Properties by Brandon Turner, the book on Estimating Rehab Costs by J Scott, and the book on Flipping Houses by J Scott, among others like Never Split the Difference by Chris Voss, etc. Reading from others who have done this already and from people who have a different insight on life is definitely something to look forward to every day to grow. 

I wish you the best in your journey. 


Hey @Ana Coello ,

Thank you so much for sharing - it's great hearing about REAL experiences and what the take-aways were.

I have already used up my free trail for the analysis tools, so I may be signing up for BP Pro myself! Do you use these tools exclusively, or are there other analysis tools that you would recommend? I have found it helpful to play around with the numbers (purchase price, rehab cost, down payment, expenses, etc.) and see how it changes the numbers (cash on cash return, cash flow, etc).

I totally agree with your second bullet as well - based on my research so far it is vary rare to find a duplex that will pay for mortgage and expenses (with just 1 unit's rent), but it will significantly subsidize my monthly living expenses overall. Which is a win!

Also, what is an REA? Is this a type of meet up? If so, I think this would be a great way to network.

Thanks again!


Hey @Zach Wright

Yeah we have used the BP calculators exclusively but the books show you how to do the calculations by hand and explain how and why everything makes sense. It’s always good to know why things are important rather than just using the calculator but for us it saved us so much time because we could run the analysis and have reports for any house we were interested in in a matter of minutes. Then we would contact our real estate agent and get to see the property ASAP.

Yes, a REA is a real estate association. You should have a local real estate meeting near you and if you don’t have one you can start one! We found both of them searching on BP for local meet ups in our area but one of them is also on “meetup” and the other is also on Facebook. 


Thanks @Ana Coello - I'll definitely check out the books as well!

Do you have any advice for the showing process (when you find a deal you're interested in and go see the property). I'm still somewhat unsure of what the "rules" are. Do you normally go with your partner? Do you bring a contractor along to help with rehab estimates? And do you normally work directly with the selling agent or work with your own agent?

And advice from your experience would be awesome!!!



@Zach Wright ,

For finding properties we first went to get approved at a bank. (had to do some research there but just get an initial letter of approval so you can know what you're able to work with). Then we talked to an agent who is a real estate agent himself, was actually on the BP podcast, and told him we already pre-approved and were serious about buying a house. We had our criteria of what we thought was best for us and we encouraged his feedback. He agreed to work with us and from then on it was golden. He was very knowledgable; not only about the real estate market but also about rehabbing the property to maximize profits, etc. He was a real asset to us. 

We would try to go to every house together, my partner and I. But the house that we ended up getting I went to see it with our agent. We went to see it the very first day it was on the market. My partner had to work so he couldn't go but I was there asap. I saw the potential in the house and our realtor told us it was a good area, near the subway/metro/public transportation with great schools (if we ever were to rent it to a family), etc. 

We put an offer in quickly and went to see it with a couple of contractors the day of the inspection. It had a tenant in so we had to do everything at the same time, which was crazy busy but time efficient too. We tried to time the contractors one after the other. 

We, my partner and I, never saw or spoke to the seller or the selling agent. Our realtor dealt with all of that. Advice: get a really good agent who knows about real estate investing. 

Like always, happy to help with every bit of info possible.


Hey Zach! 

I would start by getting a pre-approval from a lender for your FHA loan. Once you have that, you'll be able to analyze and make an offer on any deal that makes sense.

I suggest you look for properties without a realtor so you can ask for 3% discount on price or to be put towards your closing costs (this is what i did with my primary residence). This mean i only had to bring 7k to the table for a 290k house. 

To do this you will have to contact the listing agent for every property you find. 

To house hack I would also make sure that you analyze the market rent for the unit you will be renting out to make sure it covers a good portion of your mortgage. If you're in a good short term rental location, i suggest you take that into account as well and decide which of the two will give you a better rental income. 

Lastly, if you want to house hack make sure you have 20-25% equity in the home after repairs to make sure you can do a cash out refi and get all your money out. 

Hope this helps and good luck! 

@Ana Coello Great actionable advice! I am in the process of trying to acquire my first house hack within the next 6 months. I have been working on getting down my debt and saving up as much as I can before I go get pre approved.

I’m curious as to how your house hack has been going since your initial post in September. Would you mind sharing how the different scenarios you analyzed before you purchased the house hack has played out ? Has the process run how you planned it?

@Kevin Zolea , no problem! 

Since September we have gotten 2 tenants and are working on our third. The tenants that we have are quality tenants that have given us no problems whatsoever and pay their rent on time. The rents have worked out like we projected them. Utilities as well, some even a little less because we had to get new ac and heating in the remodel so the new models are more energy efficient. We also had our energy company come do an inspection of the house to see where we could be more efficient. They insulated the water heater pipes and that's about it since we have everything else energy efficient (appliances, lights, etc.). Since we put a big chunk of change in the remodel, we haven't really had any problems with anything breaking (no repairs), except one backed up pipe that was pretty much the only one we didn't replace (that's a whole other story).  

Now we are working on paying down the remodeling debt to lower our debt-to-income ratio to refinance the house and get the cash out to use for the next house. 

Any particular questions you have? 

@Ana Coello Thanks for your reply and for giving me some insight into your house hack scenario!

That's awesome that you got quality tenants and that everything seems to be how you projected it. The one thing I am nervous about when analyzing my deals is projecting the rents and rehab budget( looking to get something with a light rehab). Just out of curiosity what tools/strategies did you use to get to the most accurate numbers? I have been using and looking on craigslist to get rents. However, for the rehabs, I have been struggling. Do you just use your best estimate by looking at the pictures and knowing what labor/materials usually run in your area or do you have some type of standard for the different age of the home, etc?

@Kevin Zolea

For rents, rentometer seemed off for our area (MD very close to DC). We used Craigslist a lot. You can also check out Trulia,, hotpads. That’s where we advertise room rentals. (Zillow posts to trulia and hotpads, it doesn’t advertise room rentals). You also have to take into account your neighborhood (are you close to the metro/subway?) and your amenities (utilities included?, new appliances?, modern aesthetic?) because that can move your rent up or down. 

For rehabs before we bought it went to see the property, we did VERY generous and general estimates based on the prices for our area. So get familiar with your prices. Peruse Home Depot, Lowe’s, etc. to just get a feel for what a toilet costs as well as flooring, etc. When you go visit a house you can take pictures or videos and then go home and make a more specific estimate of what you’ll think needs work. Also be very generous when making your numbers. If you believe the house works then make an offer. You’ll have time for an inspection and to take a contractor to check it out as well. Remember that if you work with a real estate investor/agent, he/she will also have some ideas as for the remodeling of the home. We used our agent as a guide as well. Different houses will require different estimates. 

@Ana Coello Wow! Thanks for all this great advice. Seems like you have a strong understanding of your market. I am going to take all these great tips and start utilizing them for my analysis and understanding of my market. I truly appreciate you taking the time to answer me and giving me all this valuable information.

I'm still stuck on if I wanna do rent by the room single-family house strategy or if I want to buy small multifamily. In the area I have been looking in there aren't much small multifamily so I'm thinking about taking the route you took and do rent by the room. I'm guessing when you do the initial analysis you take into account renting out the entire house for when you move out and see if the numbers still work?