House hacking vs Renting

4 Replies

Hello BP members!

What would you do if you were in my shoes?

We wanted to purchase a duplex and do the house hacking idea but what if we bought a duplex and rented somewhere else?

By us renting another apartment we could live in any part of the city we wanted and we would not have to live next door to our tenants. On the other hand we would have to put 20% down - which is possible for us it would just take a little longer (a few months) to save that much.

For apples to apples comparison let's say the cost of renting another apartment vs doing an owner occupied duplex broke down to be the same cost per month, which option would you choose? What are some pros and cons you see with each option?

Thanks for your input! I am eager to see what you guys have to say about this. 

Definitely house hack. In the scenario where you are paying the same as renting (although at times if you find the right deal, you will be paying no money), you are at least paying towards an asset and something that is YOURS. In 2003 my dad chose this method on a triplex that was $310k without knowing much other than he’s not going to be paying much of the mortgage. Today that one decision has led him to own a building that is now worth $850k. The power of owning real estate can be great — take advantage of it!

Originally posted by @Frank Macias :

Hello BP members!

What would you do if you were in my shoes?

We wanted to purchase a duplex and do the house hacking idea but what if we bought a duplex and rented somewhere else?

By us renting another apartment we could live in any part of the city we wanted and we would not have to live next door to our tenants. On the other hand we would have to put 20% down - which is possible for us it would just take a little longer (a few months) to save that much.

For apples to apples comparison let's say the cost of renting another apartment vs doing an owner occupied duplex broke down to be the same cost per month, which option would you choose? What are some pros and cons you see with each option?

Thanks for your input! I am eager to see what you guys have to say about this. 

 Assuming the amount of money to be realized was the same, it really comes down to preference and legality. If you get a mortgage that requires you to live in the premises for a certain period of time, then technically you would be breaking the law. If there's no stipulation, then it just comes down to what you want to do. If your side of the duplex say would rent for $1000, and you rent an apartment somewhere else for say $800, you are not any better or worse off either way other than not being on site, which could be a good or bad thing. 

@Frank Macias I had the same question and chose to do the live-in strategy with a 3-unit. I highly recommend it. You are literally 10 seconds from the other unit. That allows extreme ease of doing showings. You can also walk right over to see if something is wrong. If you are the kind that wants to get your hands dirty, you don't have to haul tools everywhere. If not, you are right next door to let in handymen, plumbers, etc. without needing to figure out how to get them a key. I also found that the good tenants brightened right up when they knew I would be next door. They knew I was 100% involved in the property, and unless I'm a loser will keep it better than a remote landlord who never sees it or is too far to make frequent visits.

If you plan to only use property management, then it may be better to no occupy. Another consideration is neighborhood. I had a wife and daughter and it was not a good place for a family to be. We ended up moving out after 1.5 years and making all 3 units rentals... but owner occupying juiced the returns because of the low down payment and allowed me to buy other rentals with the money I didn't have to spend. Be careful though... Now that I'm in a traditional primary I get furious every... single... month... when I pay the stupid mortgage with my own money rather than tenants'!

Look a couple years down the road and see which model gets your life closer to where you want it to be. Best of luck!

@Bryan O. great insight! Thank you all for your input. I was leaning towards the house hacking idea but my wife put some doubt in me. Thanks again! 

@Paulina Macias check it out.  :) 

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