Preparation for my first house Hack.
Raleigh, NC · Member since 2020 · 2 posts · 1 vote
I’m preparing to purchase my first home hopefully this year. I plan to purchase a single family home in Raleigh, NC, with renting out the other rooms to long time friends. I just want to know what to prepare for upfront financially outside the scope of a deposit and closing cost. And if it’s a good idea to have a already renovated property or buy a house I can build sweat equity with.
Hi @Richard Sessoms congrats on getting the ball rolling on your investing career! As far as preparing financially, you will want to have cash reserves set aside in the amount of 3-6 months worth of mortgage payments. This will help you have any unexpected expenses WHEN they happen. Also, a lender may require you to have this as well. To find out what a lender will require you will need to speak with one. They're not scary... they want to give you money... that's how they get paid!
If you’d like a recommendation for a lender DM me. I have one that I have closed many house hacking sales with (my own house hack included), and checks off all of the boxes above as well. Not to mention she’s licensed in all 50 states.
And if you're looking for a property to build sweat equity, that still costs money... so that is additional money you will want to have set aside.
Get a good first property and then move on. Don't try to hit a home run with a rundown pile of junk that might make you some money or might sink you. Most of my clients have base hits properties. Base hits add up in the long run to an amazing portfolio.
For your first house hack, start simple and go from there. Find a nice, pretty property that is in great shape and make sure the numbers work. There are plenty of houses out there right now that can potentially work for you.
@Richard Sessoms
I have the same plan for mid 2020. As you are going to be a landlord, I’d recommend you also have some savings set aside for repairs.
“Turn Key” houses are a great start if you can get it at a descent price and it can cash flow as a single family rental after you move out. A house that needs renovations is a great way to force appreciation, but you “tenants” have to be okay with the ongoing repairs. It is probably best to do repairs upfront before moving tenants in if you go that route, just so their quality of life isn’t interfered with!
Definitely hard to get good rents into a "construction zone" however being transparent that the kitchen will get a full facelift in the near future and planning the work accordingly with them could work. Same for bathrooms if they'd have to share together for a period of time. Otherwise, renovations between tenants is a quick and easy way to plan the work.
Utilities are something that people may not consider, but they will naturally go up (double? triple?) with 2+ other people in the property. Laundry machines running more often. Lights being left on when you aren't there to turn them off. Shower use. Toilet flushes. Everything increasing.
Also consider TV/internet packages. Tenant would generally like to have good internet if they're going to be paying good money for it. Or you can use it as a selling point to future tenants.
Remember that when you're looking to buy, run the numbers on the property as a house hack. But don't discredit running the numbers as a stand-alone rental since per-room will usually get you more rent than entire-house. Make sure it cash flows both ways!
Hi @Richard Sessoms congrats on getting the ball rolling on your investing career! As far as preparing financially, you will want to have cash reserves set aside in the amount of 3-6 months worth of mortgage payments. This will help you have any unexpected expenses WHEN they happen. Also, a lender may require you to have this as well. To find out what a lender will require you will need to speak with one. They're not scary... they want to give you money... that's how they get paid!
If you’d like a recommendation for a lender DM me. I have one that I have closed many house hacking sales with (my own house hack included), and checks off all of the boxes above as well. Not to mention she’s licensed in all 50 states.
And if you're looking for a property to build sweat equity, that still costs money... so that is additional money you will want to have set aside.
Get a good first property and then move on. Don't try to hit a home run with a rundown pile of junk that might make you some money or might sink you. Most of my clients have base hits properties. Base hits add up in the long run to an amazing portfolio.
For your first house hack, start simple and go from there. Find a nice, pretty property that is in great shape and make sure the numbers work. There are plenty of houses out there right now that can potentially work for you.