First rental investment (house hack) in Butte Montana

2 Replies

I am looking to purchase my first rental property in Butte Montana. I am a full time student and will be finishing engineering school in one year. I figured for my final year why not start my real estate investment in beautiful Butte and try a house hack. I have been looking at a multitude of multifamily properties but have narrowed down to a duplex @ $139.5k (2/1 & 1/1) and a quadplex @189k (1/1). They both have a strong rental history. The duplex is more affordable (considering im a student). While living in one of the units of the duplex, after the mortgage and operating costs are payed from the other unit ($775), I would be paying just less than 300 out of pocket. When I eventually move out I would see around 150 dollars of cashflow from the duplex immediately. The quadplex would cashflow even while house hacking right off the bat. My only issue seems to be funding and providing proof of income to get qualified for financing. I think I may start with the duplex considering it will drop my monthly expenses while house hacking and give me a solid first deal under my belt without biting off more than I can chew right away.

Any thoughts or input?

Congratulations on going for it!!  

Still keep in mind it Might be hard for you to qualify as a student... I admire your drive, but if you're trying to get bank financing, don't get too excited until you get qualified... do you have parents or anyone to help you qualify?    Usually you have to show W2's from a job for a couple of years, or much shorter if you get out of school and get a job that's directly related to you field of study 

Also if the 4 plex cash flows better, that might be easier for you to qualify for, because your debt to income level will play into how you qualify... check with a lender.  I like 4 plexes, and I think if it cash flows while your living there and getting free rent, its gonna be really awesome once you get the next one!  

Be prepared for the lender to want to be convinced that you're ready to self manage your property;  sometimes they want proof that you have some experience.  And speaking of which, it's good to figure in management into your budget even if you plan on managing it yourself, and then pay yourself for management

  Will you have to move away when you get a job out of school?  Def need excellent management so it's not a long distance nightmare if you're trying to manage the property from afar while trying to focus on a new job... Most folks would say when you're buying out of State, your first search is to make sure you have access to excellent management, and since you may be out of state yourself you might want to approach it as such.

just some thoughts.

Good luck!

@Alan Brown

Thank you for your input! I appreciate advice from someone who has done it. I am already prequalified for an FHA @ 3.5% down. I have added the property managment fees into my calcs and could cashflow 200 bucks while living there (25% vacancy). I will be using the property managment company that I am familiar with when I was renting out houses starting college out. I have built a relationship with the current manager and CEO Robert Edward's. Where in Montana do you invest? And what type of property? Thanks Alan.

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