BRRRR vs House Hacking

14 Replies

Hi All,

I live in CNJ and currently rent. Exploring my option for when my lease ends early 2022.

Option A: 

BRRRR (in or out of state) while continuing to rent in CNJ. Would like to find a BRRRR project with total all in of around 75k or less.


Option B: 

House Hack a duplex with FHA loan. I would like to stay in the CNJ area where duplexes are hard to find under 400k but am open to moving a little south. Would still like to live in at least a B class area with quality tenants if I have to live next to them for at least a year.

Would appreciate some insight, pros/cons of each one of my options and some areas I should focus on.

Thanks!





Hey, @Osama Syed ! Whle I have not done the BRRRR method myself, I am an experienced house hacker and have found that to be a very easy way to get your foot in the door with real estate investing. If you're able to cash flow in your market while living there, that would be ideal but a lot of people see a HUGE increase in cash flow once they move on to their next property and house hack the next. Just my two cents! Good luck!

if you have 75k you can house hack in nj if not id brrr out of state, you can net 1500-1700 depending on your market and learning to do it out of state is vaulable because now the entire worlds your market 

@Osama Syed Congrats for having interest in real estate. I used to live in CNJ and know the issues with the lack of duplexes. I also know the higher cost of living that an hour north on the NJTPKE has. I have done 2 BRRRR deals in SNJ. I currently have 4 rentals and a portfolio of NJ tax liens.

I have never house hacked and can't speak to it.  However, the rental rules do change if the property is owner occupied - they are a bit stronger for the landlord.  

I wish you luck on your journey.

Originally posted by @Osama Syed :

@Mike Ost would it be wise to tie up 75k in a property and have to start saving all over again for the next property in your opinion? What benefit do you feel house hacking has over BRRRR

 i cant speak to your personal mindset etc

but if you house hack you can move again in a year or 2 so that money isnt completely dead

also as suggested by Shawn above, if you force equity you can also get some money out that way

Originally posted by @Osama Syed :

Hi @Joe Martella thanks for responding. Do you pay contractors to look at a property before you purchase? How do you go about estimating rehab costs? 

 I don't pay contractors to look at a property, but I am sure some do.  There is a book on estimating rehab costs.  It is available on the bookstore.  I have yet to read it, but it is on my list.  I do some work on my own to keep costs down.  Personally, I think that you need to do some of the work on your own to learn.  I had zero knowledge on how to do and fix things, but some research and YouTube and hands on experience and I can do a good amount of stuff.  It is important to learn, because as simple things break, you know how to fix them yourself.  A simple repair can cost $100's that you can easily save.  

In the beginning you need to stretch your dollars.  When I look at a property I am interested in and serious about buying, I take photos of every area.  If it is occupied, I am respectful of the individual's privacy, but if it is vacant, I try to get every room from every angle to include all the mechanicals.  This allows me to look through the photos and see what I didn't realize while I was there.  Going into a new place can be a lot to absorb that you don't realize at first.  I make a list, and figure out how much the materials are, and give myself a high estimate on labor.  I can youtube to figure out if it is something I want to take on.  If you have a larger job, you can talk to someone to come give a FREE estimate.  The problem you have is reliability and access to the property you are buying if it is occupied/realtor has time. You can also Google the costs estimates.

As far as me, I have a couple of handymen I use that I can talk to and send them pictures and ask their opinions.

@Osama Syed finding a BRRRR out of state that is all-in for $75K is going to be very, very tough. Unless it's in a very low-cost midwest neighborhood that is far away from NJ, it's likely going to be in a challenging area. Not saying it can't work, just that every step is going to be difficult.

I would house hack. I do not think BRRR is possible in NJ, except perhaps in South Jersey. Maybe you could do it in Pa. This is due to the prices and taxes. I would be wary, at least as a newbie, about buying a rental property far from where you live. My properties are within 10 minutes of my house and I think it would be real tough if I could not get to them when emergencies occur or repairs are needed.

I would love to hear ideas from others, though, about how you can take seed money such as you have and make a career in NJ real estate.