Should we still try to pursue FHA loan "house hacks"? Or wait?

Question

So we finally qualify for a mortgage this year after 2 years of self-employment... we wanted to buy our first property, a 2-4 unit place with FHA this year... but with the whole coronavirus thing, supposedly the market prices are supposed to go down... but I live in a small town, and no one here seems to want to reduce their prices as of yet... prices are pretty expensive here on the west coast. Should we just rent for now and pursue the whole FHA thing a few months from now?

Is anyone here still pursuing FHA house hacks during the coronavirus events?

Evan Polaski · Answer

@Ellie Narie, also, beyond the current market, does a deal make sense. With a house hack you have two ways to look at it: first as a stand alone investment. You buy a 4 family and rent all 4 units, are you cash flow positive and happy with the return levels you are expecting.

Second, as a house hack. You live in 1 and rent other three. What does your cash flow look like here? It is likely negative, but if the loss is LESS than you currently pay in rent, you are still in a better position than today.

As for the buy now or wait, as @Adam Tafel mentioned, the harm in waiting is you continue to pay rent currently, which is money out the door (meaning minimal in the grand scheme of things). If you buy a property that lessens your current outflow and can create income as a stand alone, your risk is that that same property may or may not be worth less in a few months, 1 year, 2 years from now. But as long as you don't have to sell, it doesn't matter because you are still cash flow positive.

Adam Tafel · Answer

@Ellie Narie - everyone is trying to speculate on covid19 housing effects. Yes, plenty of buyers are continuing their search for multifamily house hacks, I've done a few video tours for clients this week. Take into consideration the greater economic picture, but don't stop looking for deals.

My advice? You don't have to commit to a purchase to start the process. Go to showings, analyze properties, and offer if you find a great deal. Waiting a few months won't hurt either, it's unlikely that home prices will rise substantially in the next few months. Network with investors in your market and pick their brains about how rents were effected during the last recession. There's plenty of work to be done, coronavirus aside.

Should we still try to pursue FHA loan "house hacks"? Or wait?

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