House Hacking a multi-family property w/ an FHA loan in DFW. Thoughts?

Question

Hey everyone,

My wife and I have some cash to deploy and now we are between investing that money in DFW or out of state.

If we decided to invest in DFW is there a high probability of still finding multi-family properties (1-4 units) that we can house hack with an FHA loan that can potentially cash flow after year 1 or at least break even?

With property taxes sky rocketing not sure how many opportunities there are to even still cash flow here in DFW.

Has anyone recently house hacked a duplex, triplex or fourplex out here in DFW?

Daniel Mendez · Answer

I appreciate the advice! Congrats on achieving those 100 units. Wishing much more success in the coming years

Daniel Mendez · Answer

Yea it seems triplexes are hard to come by. 4 units tend to be in the worst parts of the city. I think if I want to invest where I can potentially cash flow it must be down out of state.

Jennifer Volek · Answer

I really enjoy my multifamily property in Arlington. There are a few on the market right now that could go FHA. Do you think you could self manage? I do and it helps keeping money in my pocket. We live in one of the 3 units, and my tenants pay the mortgage, plus some. Its awesome, lets chat, I would love to help you achieve the same success.

Jay Hurst · Answer

East Dallas is going to have the most 2-4 units in town.

Daniel Mendez · Answer

I've seen some properties around Richardson, Garland even around bishops arts district. It would honestly depend on the neighborhood. Maybe a C neighborhood where I feel comfortable walking at night

Jay Hurst · Answer

@Daniel Mendez  Where in DFW are you looking?

Anthony Angotti · Answer

I house hacked for years! It helped save up the money to accelerate traditional RE investing. I now own over 100 units, mostly commercial. When it comes to house hacking don't worry so much about the cash flow. OBVIOUSLY you don't want to be so negative that it kills you, but if you're only a few hundred under your expenses you get a super cheap place to live, like you said. Also, if you buy in a pretty valuable neighborhood you basically get a good asset for low money down that will appreciate well AND cash flow well after you move out (Assuming you live there for a few years).

Real Estate really is a get rich slow game. Don't forget it. Value appreciation, rent appreciation, and principal paydown are still the MAIN drivers to wealth creation in real estate.

Bruce Lynn · Answer

Cash flow is mainly a function of how much you put down in today's market probably in most areas of the country.   In DFW you may have to put down 30-40% to cash flow and also pay your portion of the rent for the space you are occupying.    I think it has been 10-15 years or more since I've seen a 4plex in DFW area where day 1 you could put down 3.5% for FHA, qualify, live in one of the units for free with the other 3 paying the mortgage.  There can always be exceptions and deals around, but it is more like the needle in the haystack than the normal find.

I think it is often a better single guy strategy than for married couples especially with kids, unless your wife is 110% on board with the idea and can see the dream at the end of the tunnel.  That's often where men and women are different.   The guys are excited about the find and the potential and the Mrs. typically waiting by the door saying they would never live there or raise their kids there.  Gotta have a plan and work it together to be successful.  Of course there are also exceptions to the Mrs.....think Chip and Joanna....or maybe Tarek and Christina.   I've seen it but it is rare.

Daniel Mendez · Answer

I appreciate the input Jay. Yes, it seems like finding a cash flow opportunity with an FHA would be a mountain to climb. If I was planning to live in Texas for the next 5-10 years then I wouldn't have had a problem with house hacking without worrying about cash flow being that it would allow me to have a smaller mortgage payment. But because I am looking to move somewhere else in the next year or two then it wouldn't make sense for me to use an FHA for a house hack.

Seems like my strategy has to be out of state.

Bruce Lynn · Answer

From what I normally see you probably need about 30% down to cash flow and also pay your 1/4 share of the mortgage.  Obviously there can be exceptions and depends on where your wife wants to live.

I'll guess it is easier to find and qualify on a 2 unit, we don't have many 3s, and your wife probably won't live in a 4 and they seem to be few available.

House Hacking a multi-family property w/ an FHA loan in DFW. Thoughts?

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