House Hacking in a Hot Market

9 Replies

Hello, I am currently looking for a 4-unit house hack in a hot market (Dayton, OH). These 4-units come on the market and are gone in a day. NONE of the 4-units posted in the past couple months will accept FHA financing. How am I suppose to make this work when no one will accept an FHA loan and all these properties are selling at or above asking in as little as three hours?!? Should I seek private lending to fund a down payment on a conventional loan? How can I convince a seller to accept an FHA offer? I have been looking for a 4-unit since March, very few appear on the MLS and the ones that do don't like my financing. What do I do?

Thanks,

Tyler

Yup, time to get more creative with your funding and strategy. If everyone else is beating you at your approach, then either "up your game" or "change the rules"... I like to think of real estate deals as puzzles to solve. Sometimes you aren't playing with enough pieces to complete the deal, unfortunately.

1) Do you have an investor friendly RE agent looking for off-market deals for you? If not, i suggest going to your local REI groups and networking to find one or more.

2) Run the numbers a bunch of different ways. Can your strategy be successful with duplexes or triplexes? Maybe you can start smaller like @Matthew Perry suggests. Or expand your search criteria and widen the radius to include Cincinnati/Covington, Columbus, or even Indianapolis? Your strategy may work better in some markets  than others based on the local supply and demand.

3) Yes, Private money is another option, and I recommend Matt Faircloth's book, "Raising Private Capitol" as a way to structure your thinking about, and approach to soliciting OPM. These lenders will care about exactly how you plan to a) protect their money; b) use it effectively; c) provide them a reasonable rate of return. If you were going to pull in private or hard money lenders, you'll need to have a solid plan in place for what you want to do with their money, AND multiple exit strategies to get their money back at the end. 

4) Is there anyone else in your area doing what you're doing? Maybe reach out to someone who "stole" a deal from you and offer to partner with them? Maybe Rent one of their units and offer to manage the property in exchange for mentorship. 

Good luck and keep up the grit!

Respect,

Greg

I agree with both of the previous responses have alluded to. Building a network of deal finders will help you get in front of properties that meet your investment strategy. But you probably need a financial Plan B, C, and D. If house hacking does not fit your particular market's wheelhouse, you need to change up the approach. Also curious. Is Dayton the only hot market near you? Or other towns/suburbs nearby providing opportunities that fit your needs?

Originally posted by @Tyler Gerhold :

Hello, I am currently looking for a 4-unit house hack in a hot market (Dayton, OH). These 4-units come on the market and are gone in a day. NONE of the 4-units posted in the past couple months will accept FHA financing. How am I suppose to make this work when no one will accept an FHA loan and all these properties are selling at or above asking in as little as three hours?!? Should I seek private lending to fund a down payment on a conventional loan? How can I convince a seller to accept an FHA offer? I have been looking for a 4-unit since March, very few appear on the MLS and the ones that do don't like my financing. What do I do?

Thanks,

Tyler

Haha yeah, the multifamily market is hot right now because interest rates are so low and everyone has cash. I am located in Columbus, Ohio and it has been competitive for a while now. I am still finding deals though

Any multi-family deals barely last a day here in Columbus. It's a good and a bad thing. When I want to sell, I know I'll have a buyer but when I want to buy, I'll have to fight off other parties, that's why I love off-market stuff @Tyler Gerhold !

Originally posted by @Tyler Gerhold :

Hello, I am currently looking for a 4-unit house hack in a hot market (Dayton, OH). These 4-units come on the market and are gone in a day. NONE of the 4-units posted in the past couple months will accept FHA financing. How am I suppose to make this work when no one will accept an FHA loan and all these properties are selling at or above asking in as little as three hours?!? Should I seek private lending to fund a down payment on a conventional loan? How can I convince a seller to accept an FHA offer? I have been looking for a 4-unit since March, very few appear on the MLS and the ones that do don't like my financing. What do I do?

Thanks,

Tyler

 Here in Columbus the market is competitive in a similar way to Dayton, I would recommend trying to purchase a duplex first since there are more available at a time.  

I would try and pull a list of off-market properties consisting of duplexes, triplexes, and 4 units and do a direct mail campaign to them. You will not be able to compete for the MLS listed properties so you need to generate leads for off-market deals similar to what a wholesaler does. This allows you to make offers without competition and you can get some good prices that way. Feel free to reach out if you need help.