House Hacking tips and advice?

Question

Hey BP,

Quick questions:

1) If you have house hacked, what was your DP and what process (fha, conventional, OPM, etc) did you use?

2) What were some unexpected barriers/obstacles you encountered along the way?

Abel Curiel · Answer

Hello Kyle,

I house hacked in 2010 using FHA 5% down payment. It was pretty smooth since I bought directly from the seller.

However, I work with a ton of house-hackers now as a Realtor in New York and I see that most of the barriers come from either financing or title.

With regards to financing, make sure you're very clear on what your acquisition expenses will be - inspection, attorney fees, down payment, appraisal, closing costs, homeowners insurance. When you get pre-approved for financing and meet with a local real estate agent, you should get a pretty good breakdown of what these costs will be.

Regarding title, you'll want to look out for any liens, judgements, code violations, open permits, etc. against the property. I'm not sure if GA is an attorney state but here in NY, the attorney generally coordinates the title search. My clients are also free to seek their own title company or use a referred company here. I would ask your realtor about how this works in your market

Best of luck to you moving forward!

Abel

Daniel Haberkost · Answer

1.) I've done a 3.5% down (FHA) on my first property and 5% down (Conventional) on #2, both of which were house-hacks.

2.) From my experience so far, this can be a very painless (and profitable) arrangement if you put the work in up front. You MUST screen your tenants thoroughly, never cut corners. Decide on your requirements and do not vary from them at all. If you rent to friends the same rules apply and they need to understand that. Make sure you communicate clearly with your prospective tenants as to your expectations. For example, I tell mine ahead of time that under no circumstance are they to pay rent after the first, wake me up at night, or leave the kitchen dirty. There's no ambiguity and they know exactly what to expect. Make sure you also discuss whether or not they will be having significant others/friends sleep over and who is to buy toiletries/kitchen soap ect.

Also be mindful of everyone's schedules. If there are 4 people in the house and everyone works a 9-5 that may be problematic. My tenants all work different shifts so they don't run into each other much and that didn't happen by accident.

Hope that helps!

Kyle Jones · Answer

That's great information. Thanks for that!