I am uncertain whether I should invest first in a househack (most likely a duplex) or a BRRRR property.
Currently I am an 18 year old, saving most of my income from a part-time job; living with my parents. I am also in college for Civil Engineering and plan to use that diploma to help me save for buying properties in the future. The problem again is if house hacking; moving out of my parent's house first is a wise choice, or to continue to live with them while I make BRRRR deals and then move out? Fortunately I am lucky enough to have understanding parents that will let me live with them for a bit while I save money. Which investing strategy woule be the better choice if you were in my shoes? I am open to any advice, thank you!
@Yllan Lalic as a first time homeowner, you may be eligible for certain benefits including little to no down payment assuming you live in the property as your primary residence for at least 6 months. With that being said, purchasing a duplex, triplex or quad may be a good strategy to allow you to take advantage of your first time homeowner benefit while renting out the other units which would hopefully cover your cost of living (and maybe more!).
If you have the option to continue living at home, you can see if foregoing the first time homeowner benefits are worth it if you could instead collect more rent for the unit you wouldn’t be occupying (by more I mean that the potential rent of that one unit outweighs the benefit of first time homeowner benefits).
Personally, I prefer Multifamily homes over single family homes because it gives you a safety net in case a unit is vacant - at least you have the other unit(s) producing income. Whereas with a SFH, if the home is vacant, you have no money coming in.
Kudos to you for thinking about your future (especially in real estate) at such a young age! Best of luck!
Thank you for the advice! So whichever produces better cashflow would be the wiser choice in you opinion?
I am wondering if I househack first it will take a while to save money again to invest in another property whereas if I first invest in BRRRR property I am able to reinvest the capital quickly.
I agree MFH are overall a better investment but I think I will start off my future portfolio with SFH and once I get my hands on a couple properties and have a cushion of capital then I will start BRRRR with MFH. What do you think? How has your real estate journey been for you? I am from Canada how about you?
@Yllan Lalic Hi!
Being able to live at home, and for free, is obviously awesome because you get to save a ton (and still get free meals, ha!).
however, i am a strong supporter of house hacking; it will not only get you into a place low-money-down (as @Natasha Jansen mentioned), but will also teach you how to screen tenants, work with contractors, analyze a deal, maintain the house, etc. It will give you the confidence to move onto other deals! Many big-time investors started out this way. In a best case scenario with house hacking, you'll be living for free in addition to cash-flowing and having tenants build up equity in the property.
I am not familiar with the Winnipeg market, but you should link up with some local investors and investor-friendly agents. Chat with them, ask about the best rental strategies and use these resources to guide you in the right direction. No two people have the same story, so be flexible and open to different opportunities. Rooting for you!
@Grace Wang Hello! thank you so much for the response!
So it seems like house hacking would be the better option to really develop my investor skills and become more independent as an adult.
I will try to link up with local real estate investors as well as agents to ask about their opinion as well. Currently, the pandemic is not going to let that happen for now but I am looking forward to it.
Also thank you so much for your support! I wish you best on you real estate journey as well onto financial freedom!!
House Hacking a duplex.. Great job starting early.. You have any connections in Winnipeg?
I don't have any connections yet, but I will definitely grow my connections after covid; gatherings are not allowed at the moment.
We are on lockdown too but don't let that slow you down..
Yep! I havebeen continually reading books and educating myself about the business during these times!
You are asking the right questions, I commend you for starting your investment journey early on! I am new to investing as well, and wanted to encourage you. There is no need to wait until COVID is over to network and meet up with investors or realtors from your area. Take advantage of Bigger Pockets, Facebook groups and even Instagram to meet like-minded people. Some of the most influential and supportive people I have met on these platforms and learned a ton. Find people that will help hold you accountable. Don't be afraid to pickup the phone and call realtors in your area to ask newbie questions. You got this! Going off of advice I've received, the best thing you can do is take action. No better way to learn than to pull the trigger as soon as you can. Best of luck!