House hacking duplex question

8 Replies

Hello all, I am a 24 year old realtor with a few deals under my belt and assistant property manager making just $14/hr full time and just getting started in the world of real estate. I’m currently reading Scott Trench’s book “Set for life” and has a lot of great ideas for living frugally and putting yourself in a strategic financial position. the book talks a lot about buying a duplex and house hacking. I live in Miami, FL.. there are simply no duplexes under $250k in any decent area that you won’t go outside and get shot instantly in. So how do you get around this and begin a house hack without having to move cities as my whole life is here. I have thought about buying a SFR and renting out the rooms.. that could be an option, but then living with strangers or even acquaintances can be a bit hairy. Any advice with how I should get stared and move out of my parents house? I do have some money in savings, perhaps not enough to go through a full closing on a property.. but since I do not pay rent I can save up a large sum pretty quickly. I typically save between $800-$1,200 per month. Any advice or criticism is much appreciated!

What about buying and living further out from the city. Are there any smaller suburbs that are say 30 to 45 mins away that might be cheaper and that are nicer/safer areas?  

FHA loans only require 3.5% down. That would be less than 10 grand for a 250k property. You would probably know this better than I in your location, but in my area it is common to negotiate seller paying the closing costs. That will keep your initial investment even lower. With your ability to save I would even look at triplexes and quads. Depending on what they go for in your market with an FHA loan you may be able to save up the down payment in a couple years.

Also if it strikes your fancy consider the FHA renovation loans you might find a duplex in need of some work and be able to include the rehab in the loan.

Just make sure no matter what that your numbers work. You might be able able to pay more for a place you're going to live but you don't want to be stuck there after you're ready to move on.

Get a duplex with multiple bedrooms in each unit, get roommates for your unit. If it’s 3 bedrooms on each, deduct 5/6 of expenses. If you don’t like money, ditch the roommates.

Originally posted by @Jonathan Holmes :

FHA loans only require 3.5% down. That would be less than 10 grand for a 250k property. You would probably know this better than I in your location, but in my area it is common to negotiate seller paying the closing costs. That will keep your initial investment even lower. With your ability to save I would even look at triplexes and quads. Depending on what they go for in your market with an FHA loan you may be able to save up the down payment in a couple years.

Also if it strikes your fancy consider the FHA renovation loans you might find a duplex in need of some work and be able to include the rehab in the loan.

Just make sure no matter what that your numbers work. You might be able able to pay more for a place you're going to live but you don't want to be stuck there after you're ready to move on.

I like the idea of buying a triplex or quadplex. The only issue is that in Miami those are rare to find in any decent area. Most Duplex, triplex, or quadplex are typically in areas where you wouldn't really want to live in. There are some areas that have these kind of properties that are revolutionizing. But I would have to sit in a not so safe neighborhood for a while. The other thing is that i'd like to not age any older and still live under my parents house. So i'm looking for a good strategy that is not going to take me years to save up capital to do. 

I had forgotten about 203(k) FHA loans so that is quite a good option you reminded me of! Thank you!

Yes, after reading Scott Trench's "Set for life" and seeing how much people actually pay for a nicer place that destroys their financial security I am definitely okay with living in a "live-in flip" or something creative. The more I think about this issue and what would be a smart and correct move; I believe for my market live-in flip is probably the best way. 

The pros that I have with doing the duplex, triplex, or quadplex strategy is that I have experience with property management and am handy so I could cut a lot of costs with that knowledge of screening tenants, making sure I don't get screwed and the know-how of repairs.  

Originally posted by @Michael N. :

Get a duplex with multiple bedrooms in each unit, get roommates for your unit. If it’s 3 bedrooms on each, deduct 5/6 of expenses. If you don’t like money, ditch the roommates.

Haha, I recently saw a $250k 4 bedroom townhouse on the outskirts of town while out showing clients properties for purchases. It had a kitchen on the first floor, completely remodeled and all bedrooms on the top floor. So instantly walking I was thinking "gee, it would sure be awesome to buy this and rent out each room". But the property isn't located near any universities/colleges so I don't see what my tenant base would be like. After all, sharing the interior of the house with FOUR different persons/families and only two bathrooms in my opinion is a recipe for disaster and tension. 

Has anyone had experiences with renting out other bedrooms and sharing living space with strangers? 

I think you’re putting too much thought into being near universities.
https://priceonomics.com/where-is-the-roommate-capital-of-the-united-states/

The article is a little old, but shows Miami as #40 on the roommate list.
Coming from #2, it’s been no problem.
If they’re in my unit, I️ prefer them to be on month to month as a precaution. Any kind of problem either way, 30 day notice and the problem is solved. Most have stayed longer than a year on month to month.

@Matthew Rodriguez As a someone in your same location and realm I comprehend your difficulty. My 100% honest advice is this:

1. Persistence beats Resistance. 

2. Look for motivated sellers in your desired areas that have the zoning you desire. This way you can convert to duplex if you choose to. 

3. Close on it with either hard money or with a capital partner who understands the objective. They can either have equity and expect capital gain or cashflow. 

4. Connect and build a relationship with a solid local wholeseller.

Hope this helps. I still come across these type of deals but they have gotten more and more rare. 

Alternative options: Properties with garage apartments, accessory dwelling units, or possibly master suites that you could enter from an external door and just hole up without ever having to see the people you're renting rooms to.

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