Buying First House/Investment Property

[Hunter Wiernasz]

I am 14 and would like to start off my life as an adult (18) by ‘house hacking’. I currently have around $10,000 earned by doing jobs invested in the stock market, and am getting more from working with my dad (he hires me to help him flip houses). This is a little less than a 10% down payment for a duplex in my area. Will someone please inform me if this is a good approach, or should I try something different?

[Jonathan Bombaci]

Wow thinking about this at 14, you're off to an incredible start. I guess the questions is what is your goal? Are you looking to just get started in real estate investing or would you be looking for your own place to live? 

If you buy a house as a primary residence you can purchase it with a FHA loan with as little as 3.5% down. That means if you have 10% down for a duplex you'd probably be able to buy a 4plex at 3.5% down. Anything more than a 4plex would need to go to a commercial loan (20% - 25% down).

If you buy a property and don't plan to live in it then most banks will require a 20-25% downpayment. 

The power of HOUSEHACKING comes from the ability to buy something big (3-4 family) with a loan downpayment program. Then 1 year or 2 later you refinance out of the FHA loan and buy another multi-family the same way. I work with househackers all the time where their plan is to buy 5 properties in 5 years and if done correctly you could purchase all of them (4plex, tri-plex, duplex, Condo, SF, in that order) all using low downpayment programs like FHA.

Given your experience with flips I'd recommend exploring the BRRRR Strategy (Buy, Rehab, Rent, Refinance, Repeat) in combination with househacking. I think that could be a very powerful strategy for someone like you starting out with some flipping/rehab knowledge and clearly a family with good experience that you can lean on.

Real estate is a heck of a ride and thinking about it at 14 is incredible. Best of luck on your journey and use the next 4 years to learn as much as you can from your dad on his flips.