House hacking in condominium 5-plex?

Question

Hi Everyone,

I'm looking to begin house hacking. I know how it works with standard rentals, live in one unit and rent out the rest. I'm curious if the same rule applies to condominium units? For example, there is a 5-plex condominium building on sale near me. Am I able to live in one and house hack? I'm not sure because the condo unit owners would be paying the banks to pay off their mortgage, not me. Where as a standard duplex or quadplex would make renters pay me as their landlord. Any insight would be helpful.

Thanks.

John Leake · Answer

It would be an interesting method of investment you could be the bank in that scenario and get a return based on the interest you are having them pay you. If you owned all of the units you could also just rent them which is the more common method. I also think that for most conventional financing it has to be 4 units or less. Five or more units is considered commercial or they bank may look at each condo as its own unit. Likely you would need a commercial loan for your purchase of all of them at once.

John Leake · Answer

@Manveer Atwal You will likely be looking at 25% down for a commercial loan with a rate adjustment every 5 years. For a traditional house hack 4 units or less are ideal based on being able to qualify for conventional financing (low fixed rate and longer term) I'm not trying to talk you out of an opportunity just don't think this will be the only one! The mentality of how to make something work is far more valuable than only focusing on why it wont! Good luck with whatever you decide.

Manveer Atwal · Answer

Interesting take. I didn't factor in the commercial loan rates. I'll look into this if it's an option. Thank you for the help John!