House Hacking Next Steps

[Pablo Cuevas]

Good Morning BP,

So a few month ago I had posted about how I wanted to house hack and needed some input on whether my goal and timeline were realistic. Now, a few months down, I have spoken to a few lenders, and it seems like the dream is more and more likely by the month. My problem before was knowing whether I would be able to afford and get a house within in a year. Now I need to know more about the market, how to crunch the numbers and find a good property.

To give a little backstory, I want to buy a 200k house, and rent it out to my current roommates (there's two of them). We are good friends and I am not necessarily looking to profit off them, more so just live cheaper than we are living now in apartments, and in a house together. When they graduate from college and go back to their hometowns is when I actually want to begin cash flowing. This is all just an idea as of now though. I have thought about charging them more than I would be paying monthly, and they said they would be fine with that. I am just not sure how much to charge them exactly. 

Anyways, how do I know whether property A of 200k will be better than property B of 200k. What numbers or factors do I look for to say, "this property is gonna be really good, go up in value, cashflow nicely when my roommates move out in 2 years." I live in San Antonio, TX, and the area I am looking to get the house in is an area with a lot of things to do around it, and next to two large educational institutions and a few big San Antonio attractions. I have been using Zillow and its monthly cost calculator to see what the monthly expenses would be for every house. The costs usually come out to $1400-$1800/month. From those numbers, 3 of us and my girlfriend will be living in the house, so say 1800/4 + utilities estimate, we would come out to around 500/month each if we split the costs evenly. After they move out in two years, if all goes well, I hope to buy a second property and turn this house into a rental.  

In all, what exactly should I look at when I am searching for a house? What should I look for in my market? And how do I go about charging my roommates a reasonable price, while also thinking about rental income after they move out? 

I feel like I am all over the place, sorry, it is my first house and I just want to have a great start to my real estate investing. Thank you all for your advice and I look forward to speaking with y'all. 

[Dan Guenther]

@Pablo Cuevas

Congrats on taking the next steps towards your first investment. There are a lot of factors to consider and it can be very overwhelming at first. It will be helpful for you to take a step back and look at your big-picture goals/long-term goals? Are you going to want to hold this place long-term and are you comfortable renting out as a student rental 5-10 years from now? 

I'd think about your exit strategy and decide on a location first. Once you determine that you can start thinking about what house fits your crietra. 

Let me know if you have more specific questions and I'd be happy to help narrow things down a bit for you.