Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
I’m thinking about selling my single family house To buy a 4plex to “house hack” but I wanted to know would that be a good idea? And if so what are the headaches I’m going to have to deal with ? And if so if its possible to hire a PM while I stay in one of my units so I want have to manage it myself and deal with the headache and also do the Property manager have to tell the renters you stay in one of the units if your the owner ? Thank you guys I appreciate you all a lot that answer my questions ❤️
Real Estate Agent · Nashville, TN · Member since 2020 · 42 posts · 22 votes
6y
@Montez B. Like mentioned above, I think you're going to have a hard time finding a small multifamily. They're out there but I would try to find one before selling your current home. Do you have the funds to be able to buy a multi family and keep your current residence as a rental? I know a lot of people that house hack and they just act as the property manager and never tell the tenant they're the owner. It allows more privacy and control while living there.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
6y
@Montez B. What you described is a great idea. The management could be handled by a PM if you wanted but it will cost you. Usually it's 8-12% of rental income per month. I wouldn't waste the money if it's your first rental.
The strategy needs to aligns with realistic goals. You can't just sell the SFH and expect to find a 4-plex. I'm sure you're aware how competitive the markets are for small multi-family deals. I would encourage you focus on understanding the numbers like rental rates, expenses, and cash-flow to save for reserves. Speak with an agent to find out what your current home is worth. You'll get a better prospective of HOW FAR your money goes towards the next DEAL.
Real Estate Agent · Nashville, TN · Member since 2020 · 42 posts · 22 votes
6y
@Montez B. Like mentioned above, I think you're going to have a hard time finding a small multifamily. They're out there but I would try to find one before selling your current home. Do you have the funds to be able to buy a multi family and keep your current residence as a rental? I know a lot of people that house hack and they just act as the property manager and never tell the tenant they're the owner. It allows more privacy and control while living there.
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
6y
@Courtney Trahan yes I have the funds but I was trying to down size, and I felt like house hacking was the best choice to do so, but your right thank you very much I appreciate your advise 🙂
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
6y
@Montez B. Someone asked this same question in another thread. I'd proceed with caution due to COVID-19. Also, eviction moratoriums are still going on in many areas. I don't think courts will be hearing eviction cases any time soon as they are deemed "nonessential." Best of luck with your decision!
Flipper/Rehabber · Detroit, MI · Member since 2016 · 50 posts · 38 votes
6y
I'm thinking of purchasing my first house hack soon and believe this would be a great move for you. You have the opportunity to eliminate your housing costs while gaining landlord experience which is a great way to start investing. I would echo @Courtney Trahan's comments if you're able to keep your current home as a rental and purchase a multifamily property, this would increase your cash flow potential which is always great! If this option is taken, it's also important to keep in mind that this would require more work if you don't hire a property manager.
Atlanta, GA · Member since 2018 · 32 posts · 21 votes
6y
House hacking a good idea but make sure you're educate on how to be successful. Craig Curelop has a great book on house hacking and Brandon Turner wrote a great book on being landlord. I'd recommend reading at least one of these to know what you're getting yourself into. Those books along with the BP forums will give you a good idea of potential headaches. Most importantly, make sure you know how to analyze a potential deal and screen tenants.
You can get a PM if you want but most people recommend self-managing your first couple of properties, especially if you'll already be living there. Your PM doesn't have to tell the renters you own the property. That's up to you.
Real Estate Agent · Chicago, IL · Member since 2018 · 659 posts · 376 votes
6y
@Montez Blackburn it really depends on what your long-term goals are in real estate. House hacking can be a great first step into the business. You are literally learning the property and about tenants from living in it. Here in Chicago when I have clients that want to house hack but don’t necessarily want to live with their tenants I always recommend trying to finding a property that has a coach house. It will provide distance and for most people it seems to be a bit more manageable if they’re not stacked with their tenants.
House hacking is a good way to start building equity So that she can eventually buy more buildings. But again, it depends on what your overall goals are. Are you trying to live for free? Are you interested in being a full-time investor?
Real Estate Agent · Phoenix · Member since 2020 · 27 posts · 49 votes
6y
@Courtney Trahan wow that is a great idea. People totally look at you differently when you say the owner, vs the PM. This is a great tip that I havent seen passed around very much.
Investor · St Petersburg, FL · Member since 2014 · 231 posts · 221 votes
6y
I just bought my first duplex and moved into the rear unit. I hired a property manager to deal with the front, because my day job has me out of town frequently and for long periods.
Some things the PM and I discussed:
1. My ownership of the property will not be disclosed, BUT we also won't lie to the tenants. The neighbors know I own the place, so the tenant is going to find out. I'll answer truthfully if they ask, but also direct them to the PM for any problems.
2. Read your contract with the PM carefully. Mine had a clause that the owner was not to contact the tenant. I had that removed before I signed because I can't adhere to that, living on the property. If I didn't live there, I wouldn't want any contact with the tenant.
Other than that, I don't have much experience. This is my first house hack. I left for work so soon after I bought the place that I haven't even met my tenants. They moved in after I left town, and I haven't gotten home yet.
As for the pros/cons, I'm living in an amazing neihborhood in St Petersburg and controlling a property in a very popular and up-and-coming area for about $600/mo out of my pocket. But I'm also living in a lot less space than I'm used to, interior, exterior, kitchen, baths, parking, storage, EVERYTHING. I feel very cramped, so if I buy a SMF with more space, I'll probably move.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
6y
@Montez B. house hacking is a great strategy, although if the goal is to find a fourplex that can support property management, let you live for free and cash flow then you probably will never find a unicorn like that. I also would NOT recommend wasting your hard earned money on a property manager if you live in the building. I own a four unit that was my first investment and I spend less than 1 hour per month on the property. All you really need are one or two reliable handymen, an emergency plumber for when they are not available and that's it. I can't imagine paying 8% to have someone else call the maintenance guy for me.
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
6y
@Rachel H. Thank you I appreciate it I didn’t really think about that and I seen you are from texas I was planning on moving there and investing there, what’s the best area to invest there ? If you don’t mind me asking
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
6y
@Cyle Harris thank you I appreciate you a lot! I just want to find a property that’s a 4 plex that way I can at least have a little cash flow rather then just having a duplex, but there so rare to come across and when you do find them there not in the best areas, so should I try to save and try to get a bigger unit over 4 to do house hacking ?
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
6y
@Brandon Dumbuya thank you I appreciate it and I was thinking about investing near Atlanta also, what are the best areas to invest in ? If you don’t mind me asking
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
6y
@Sarita Scherpereel thank you I appreciate you and I’m trying to live for free so I can have Time to focus on my business and build it up more to be a full time investor if that make sense lol I’m just trying to eliminate my biggest expense while I’m young I just turned 23 and I’m not trying to make the same mistakes my peers had made
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
6y
@Colin Reid wow ! Men I'm very grateful for you for this one men I love how you broke that down and I don't mind the less space I'm single and just turned 23 so I'll be willing to sacrifice a few things and did you do FHA loan for the property or you put 20% down for the duplex ?
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
6y
@John Warren wow I really feel you on that but did your renters bothering you in the middle of the night ? Or stress you out a lot with you not having a PM ? but I think I’m gone take your route, it make sense honestly and you didn’t cash flow when living in your 4 plex ? Or did you just break even with your mortgage ? Wow I thought at least a 4plex will cash flow 300-500$
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
6y
@Mike Morawski thank you I appreciate you a lot I will love to! how many doors do you own total so far ? If you don’t mind me asking and how long have you been a investor ?
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
6y
@Montez B. my four unit was purchased as an investment, so I can't say I personally have had to live in the same building as my tenants. I can't imagine it will be that bad though if you buy in a solid area. Most of my clients who are house hacking tell me that it is a good experience. You definitely want to put good tenants in, but if you are living with decent people I can't imagine it is that big of a deal. Keep in mind that these buildings were built in some cases a century ago, so our great great grandparents were house hacking long before BP made up the snazzy name for it!
@Colin Reid wow ! Men I'm very grateful for you for this one men I love how you broke that down and I don't mind the less space I'm single and just turned 23 so I'll be willing to sacrifice a few things and did you do FHA loan for the property or you put 20% down for the duplex ?
No problem! I used a conventional loan with 20% down. I already have two VA loans, and while we initially looked at VA for this one, the property would not have passed a VA inspection, and I would have still had to put money down. I have never used an FHA loan.
New to Real Estate · Los Angeles, CA · Member since 2020 · 38 posts · 28 votes
6y
Hi there,
House hacking is definitely a great idea. The key here in my opinion is to have good tenants and people living with you. Consider them like your roommates, as they will be the ones who will support your mortgage payments and etc. While this is a good idea, I'm not sure if you want to pursue this because think about the opportunity cost. The same time you spend trying to set everything up, you can instead be using it to look into purchasing something with regards to multifamily or another type of real estate investment. You can perhaps partner up with other investors, or find lenders, etc. I'll be more than happy to help you and answer more questions for you.
Flipper/Rehabber · Detroit, MI · Member since 2016 · 50 posts · 38 votes
6y
@Montez B. I think if increased cash flow is what you're looking for as opposed to simply eliminating your rent you should go for the more aggressive house hacking strategies, i.e. buy a single family home and renting out bedrooms or a multifamily home with > 2 units.
If the quads in your area are located in questionable areas, I would consider the single family option (if you're comfortable with that) or combining strategies with buying a duplex and potentially renting out both the other unit and a bedroom within your own unit as well. It all depends on what your comfortable with and what you're financial goals are with house hacking.
Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes
6y
@Montez B., lots of advice to consider, so why not add mine too. Let me sum up your situation first as I want to lay the foundation to my advice. You are 23. You seem to feel independent enough to consider moving to a lot of different areas of the country (Texas, Atlanta to name a few). You are considering a 4 plex but don't really want to manage it or let people know you own it. Got it!
Now for you to understand me, before I give you advice. I am 64 yrs old (old fart if you will). I have been successful in three careers (20yr Fighter Pilot USAF, 20 years retired Financial Planner and currently 18 years real estate investor). There has been some overlap being a Financial Planner and Real Estate Investor. I currently own 19 rental units consisting mostly of duplexes and 1 fourplex.
Being a newbie, you seem to desire the sizzle of real estate but I am not sure you're deeply committed to the idea. I only say that because you want to buy (4plex) but don't want the hassle with day to day management. If you are going to embrace INVESTMENT real estate, especially if the goal is financial freedom, then you should get ready to eat the whole enchilada. Becoming independent with real estate is a process, embrace the entire journey! Someday you may want to own that mansion, the nice cars and have the maid to clean the house, yard boy to mow the yard and the fancy car wash service to detail the car. Great life to have. If that comes to fruition, you will have to mow your own yard, clean your own house and wash your own car first; so that one day you will be successful.
This certainly applies more so to real estate. Being green as you are, get out of your head that I will hire a property manager to handle the day to day affairs. If you do that, I can almost certainly say, you will hate the journey and will soon give up on the idea of investment real estate as being the vehicle to get you to financial freedom. I am not saying that after you become somewhat successful, educated by experience that you can't then turn to a property manager but now is not the time. You won't know when you're being ripped off or when someone is giving you bad service unless you KNOW what they should be doing and how much the maintenance, vacancy, tenant management should cost in terms of time and money.
Ok, if you're ready to embrace the journey, pick a location where you want to live. Don't base it solely on the best place to invest. Make sure you have employment prospects, a place you would enjoy living and then review if there are good real estate opportunities. For example, I wouldn't consider San Jose, CA for a newbie because even though it might be a good place to live, jobs pay well, the cost of home ownership is out of control. You get the picture.
Ok here is my advice. Sell your house! Stay where you are or move is fine. Where ever you go, buy not a 4plex but a duplex. Too many reason why, but for someone who wants less management hassles, duplex is your ticket!!!! If you are really MOTIVATED, rent out one side of your duplex and your side rent out a room. You should find yourself living for free or damn near free. Keep paying your self whatever your current mortgage payments now to an account that you will use to pay for the next duplex after two years. Since you are going to be an owner occupant you can buy with as little as 3-5% down if needed. Two years later with the money you saved by living free you will have enough to buy your second duplex. You will have the option of moving out of your current duplex into another duplex if you don't have the 20% downpayment required.
Ok, let's review. You are 23 yrs old now. I give you 1 year to focus on where you want to move. Get your plan and goals firmed up and learn as much as you can about investing with duplexes. 1% rule, cash on cash return, mortgage options, landlord and contract issues, reserve requirements, debt to income ratios, credit score, etc. Now you're 24, you execute, sell house (don't rent it out, too many issues), buy your duplex. Two years later, at 26 years old you buy your 2nd duplex. You now own 4 units at age 26. That alone puts you in the top 1% of people your age and you are on your way to building WEALTH. After two more years, YOU WILL HAVE THE KNOWLEDGE AND EXPERIENCE TO HIRE A PROPERTY MANAGER (if desired) and you will be ready to jump to the 4 plex properties or more (if desired).
As I told you earlier, I own mostly duplexes but I do own 1 4plex. Although it is a cash flow machine, I will never buy another one. For me at 65 it requires more management than all my other properties combined. Later in life, you put peace of mind over $$$. Being younger that is usually not the case. When thinking of cash flow don't go the SFH route and always be thinking of ways to reduce expenses and maximize revenue.
I am saving the best for last. Find you an old hair mentor that will spill his guts for a cup of coffee. A good mentor will be the best thing you can do. Even if you decide to move from where you are now, search out one where you are now, if for no other reason but to learn before you take a step. Good luck and Cheers!
