New Real Estate Investor Looking to House Hack

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New Real Estate Investor Looking to House Hack

Brandon Moffitt
Norwich, CT · Member since 2015 · 6 posts · 2 votes

Hello All!

First time posting, and am very excited about being a part of this community.

As the title suggests, I am new to REI. I started reading about it around 4 months ago and I am in love with the idea of building wealth through it. I'm either going to be successful or go broke trying, haha. I am a 30 y/o software engineer, and am extremely flexible with where I am willing to live for the next 5 years or so (currently in the north east, no family).

My goals with REI for the next 5 years is cashflow. I live very minimally so it wont take much cashflow to get me to the point where I can quit my job and pursue REI full time (another goal).

I tried to start a software company and took a beating, so I don't have a lot of liquid capital at the moment. I was looking at either house hacking or finding a PML and going the BRRRR route, but it seems like HH is much more beginner friendly.

I'm finding there to be a bit of information overload and would love to get feedback from the community.

My plan is to use the FHA loan and I am targeting either SFH (3bd, 2bath) or multi family units in the range of 200k-250k. I am mainly looking through Zillow, Realtor, OpenDoor, etc... Currently looking in the Tampa, Orlando, Raleigh, Charlotte, Boise, and SLC areas.

I will give an example because I think this is a useful approach: Raleigh Property

According to Realtor.com (can these websites be trusted in calculating the info below?):

  • Specs: 3 bed, 2 bath, 1170 sq. ft.
  • House Price: $185,000
  • Down Payment: $10,000 (~5.5%)
  • Estimated Monthly Payment: $984 / month
  • Zillow Rent Estimator: $1,325 / month | ~450 per person

So I could seemingly try and do $500 a month for the other two tenants and get a really small amount of cash flow...This is where I have more questions for the community:

  • Should I not concern my self with having a lot of cashflow with this first property, given that I don't have a lot of capital that I can put into the deal?
  • Do I need to be thinking about who my tenant might be? Ex. Who is interested in moving into a single bed room in a 3 bed room, and do they want to live in Knightdale?...or should I not worry about this.
  • Ive read time and time again, to get really good cash flow you need to find off market deals. Is this true in practice?

ANY help or insight you all can provide would be greatly appreciated! I would also love to network with anyone in these areas!

PS - if this isn't in the right place at all, please let me know. This forum is massive!

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Emily C.
Realtor · Raleigh, NC · Member since 2015 · 65 posts · 48 votes
5y

$200-$250k is really tough in the Raleigh market right now as we consistently have multiple offers and high due diligence fees which is buyer's out of pocket money at the time of contract acceptance. I'd recommend going online to see if you can find info on how many ppl are looking for a one bedroom in the areas you're interested in and price points. Maybe try C*list / rooms wanted. 

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  • Scott AlfanoBusiness Member
    Lender · Seattle, WA · Member since 2013 · 64 posts · 20 votes
    5y

    Hey Brandon,

    I'm in Orlando and I don't think you are far off with your initial ideas. Off market will almost always be more advantageous to get a better deal. If you are trying to stay as close to the city of Orlando as possible, I would target SFH near UCF. You can do well with a 3BR under $250K.

    There are plenty of options around Orlando that could work well, this is just one that would be much easier to rent by the room because of the University. I have sold some homes in Tampa, but it is not my expertise. I'd be happy to talk more if you decide you want to learn more about Orlando.

    Signed and Funded - Scott Alfano
    WebsiteView Page
    1Reply
  • Edgar Rodriguez
    Real Estate Agent · Tampa, FL · Member since 2017 · 191 posts · 98 votes
    5y

    Hey @Brandon Moffitt ,

    Have you looked into multifamily house hacking? You can actually get an FHA loan for a duplex, triplex, or even a quadplex. That may be a good avenue for you to explore.

    0Reply
  • Brandon Moffitt
    OP
    Norwich, CT · Member since 2015 · 6 posts · 2 votes
    5y
    Originally posted by @Scott Alfano:

    Hey Brandon,

    I'm in Orlando and I don't think you are far off with your initial ideas. Off market will almost always be more advantageous to get a better deal. If you are trying to stay as close to the city of Orlando as possible, I would target SFH near UCF. You can do well with a 3BR under $250K.

    There are plenty of options around Orlando that could work well, this is just one that would be much easier to rent by the room because of the University. I have sold some homes in Tampa, but it is not my expertise. I'd be happy to talk more if you decide you want to learn more about Orlando.

    Thank you Scott! I will definitely connect if I am seriously pursuing something there.  

    1Reply
  • Brandon Moffitt
    OP
    Norwich, CT · Member since 2015 · 6 posts · 2 votes
    5y
    Originally posted by @Edgar Rodriguez:

    Hey @Brandon Moffitt ,

    Have you looked into multifamily house hacking? You can actually get an FHA loan for a duplex, triplex, or even a quadplex. That may be a good avenue for you to explore.

    Hey Edgar,

    Thats where I started looking. I noticed that on sites like Zillow it was tough to find true multi families. The listing is under multi family, but its actually just a single unit with a bunch of bed rooms. The ones that I did find seemed more expensive than a SFH with the same amount of bed rooms.
     

    0Reply
  • Edgar Rodriguez
    Real Estate Agent · Tampa, FL · Member since 2017 · 191 posts · 98 votes
    5y

    @Brandon Moffitt

    There is some availability in the Tampa area, especially in Pinellas county. The big differences is that, when qualifying, you can take into account rent from the other units and they usually cash flow a bit better once you move out.

    0Reply
  • Carlos Paz
    Real Estate Broker · Concord, NC · Member since 2019 · 74 posts · 42 votes
    5y

    Hey @Brandon Moffitt are you considering to move to one of those cities your are mentioning? The FHA loan is ideal as long as you plan to initially live in the property as your primary residence (which includes a small multifamily 2-4 units).

    0Reply
  • Brandon Moffitt
    OP
    Norwich, CT · Member since 2015 · 6 posts · 2 votes
    5y
    Originally posted by @Carlos Paz:

    Hey @Brandon Moffitt are you considering to move to one of those cities your are mentioning? The FHA loan is ideal as long as you plan to initially live in the property as your primary residence (which includes a small multifamily 2-4 units).

     Hey Carlos!

    Yes I am planning to move into the property I purchase.

    0Reply
  • Blaine Alger
    Investor · Waco TX / Conroe, TX · Member since 2017 · 376 posts · 228 votes
    5y

    Brandon,

    Congrats on deciding to make the jump to RE, I seems you have a great start.

    I would suggest before you get started doing anything is to go and talk with some lenders to see what your financing options look like. Obviously, FHA is the way you want to go but you need to see how much the bank will allow you to spend.

    When looking at cashflow for a house hack, I would make the argument that it is not a big concern if the cashflow isn't there. For a house hack, your main objective is to reduce living expenses. So if you have shell out $150/month to cover the mortgage when it would cost you  $800/month in rent, you could consider that a win. 

    There are definitely others out there who would disagree with me and they aren't wrong. There are deals out there where you could potential cashflow  $500/month on a house hack but you could be on the look out for a couple months. 

    Moral of the story: It is more important to take the leap and buy the house hack with -$50/month cashflow then it is to spend months looking for the perfect deal. The learning will be more valuable than the missed cashflow. Once you get your first house hack under your belt, you can get more picky, haha.

    -BA

    0Reply
  • Renee Potoczny
    Largo, FL · Member since 2016 · 53 posts · 62 votes
    5y

    @Brandon Moffitt I house hack a quad in Pinellas County. I'm in the western part of the county about 3 miles from the beach. The demand for rentals in the area is pretty strong, some areas even allow STR. There are a lot of multi-family units (mostly duplexes) in the area where I live. My realtor found my unit on the MLS for me. We ran the numbers and it made sense, especially after the value add.

    1Reply
  • Brandon Moffitt
    OP
    Norwich, CT · Member since 2015 · 6 posts · 2 votes
    5y
    Originally posted by @Blaine Alger:

    Brandon,

    Congrats on deciding to make the jump to RE, I seems you have a great start.

    I would suggest before you get started doing anything is to go and talk with some lenders to see what your financing options look like. Obviously, FHA is the way you want to go but you need to see how much the bank will allow you to spend.

    When looking at cashflow for a house hack, I would make the argument that it is not a big concern if the cashflow isn't there. For a house hack, your main objective is to reduce living expenses. So if you have shell out $150/month to cover the mortgage when it would cost you  $800/month in rent, you could consider that a win. 

    There are definitely others out there who would disagree with me and they aren't wrong. There are deals out there where you could potential cashflow  $500/month on a house hack but you could be on the look out for a couple months. 

    Moral of the story: It is more important to take the leap and buy the house hack with -$50/month cashflow then it is to spend months looking for the perfect deal. The learning will be more valuable than the missed cashflow. Once you get your first house hack under your belt, you can get more picky, haha.

    -BA

    Yeah someone made this exact point to me recently, and I love this mentality. Im sure the experience you gain is invaluable. 

    0Reply
  • Emily C.
    Realtor · Raleigh, NC · Member since 2015 · 65 posts · 48 votes
    5y

    $200-$250k is really tough in the Raleigh market right now as we consistently have multiple offers and high due diligence fees which is buyer's out of pocket money at the time of contract acceptance. I'd recommend going online to see if you can find info on how many ppl are looking for a one bedroom in the areas you're interested in and price points. Maybe try C*list / rooms wanted. 

    2Reply
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