Considering House Hacking within the next year

8 Replies

Im looking to start my journey with a house hack. I am a Veteran, so I know I have access to a VA Loan (100% financed, a big plus).

I would like to know things to consider when House Hacking from local investors. (Fixed & Variable cost, P.M. or DIY)

I would have a little under $15k when ready but wondering should I tie it up as equity (to lower monthly payments) or keep it to invest in another possible property?

I will also do my best to make it to the Meet in Rocklin on Nov. 1st.

I'd love to network, maybe get into wholesaling to earn some cash to get into BRRRR and Short Term Rentals (AirBnB).

@Ryan Blake - 1.  Thank you for your service!  

2. VA loan is a great option for owner occupied AND you can even use it on a multi unit property as long as you live in one of them.

3. as far as "tying up" $15K in equity - that would only reduce your payment by around $70 a month. Without knowing more specifics of your situation, it is impossible for me to give accurate advice however here are some things to consider: As an investor, you want to get in the habit of having reserves (once you start purchasing non-owner occupied properties, you will need 6 months of PITI in your account after you make your down payment). If you are going to be relying on rent from boarders (one method of house hacking) - you want to make sure you are still comfortable if you had a "vacancy"or two for a few months. Even as a homeowner, it is a good idea to have at least 3-6 months of living expenses on hand. Or perhaps that money would be well used to improve a property that could use some updates? Depending on the project and how handy you are, you might gain more value with this method than simply putting more down on a turn key property.

If you haven't already, you should connect with a local lender to find out what your maximum payment qualifications are. This may help in answering your question as well. Example, I've had clients who qualify for a $300K home but find one they love for $310...this means with 100% financing, they'd need to come in with the extra 10K. You are welcome to message me or contact me directly if you have financing questions (VA, renovation, conventional, 203K). You will want to get pre-qualified anyway before looking at properties so both you and your Realtor know what your budget is.

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VA loan is definitely the best way to go though.

@Ryan Blake Thank you for your service! And welcome to BP! Definitely take advantage of a VA Loan. $0 down is a sweet deal that you earned!

Hi @Ryan Blake ! I'm currently working another investor who's trying to accomplish your same strategy through house hacking a multifamily property using an FHA loan and living in one of the units, so I've already thoroughly analyzed the numbers and can provide them to you for any property that's currently on the market in the entire Metrolist MLS area.

The greatest challenge you're going to have is finding a property that will still generate positive cash flow when you put 5% down or less. Mostly it will only be $100-$200, but remember that's on top of living in the property for free. Although, I do know of one currently in Sacramento that will cash flow at $550+ per month if you can put 5% down (approx. $15,000)

But in general, the numbers are going to be tight, and your interest rate will be higher using a VA or FHA loan with little money down... but the perspective to have is that you essentially get to live there for free or for a significantly reduced amount (like if you had to come out of pocket $300 to make the mortgage payment). You can sock that extra money away every month, and either save it to invest in the next property, or sell the property in two years with the capital gains exemption and then re-invest in something else.

My brokerage is actually a veteran-owned company, and working with VA loans is one of the things we specialize in. I'd love to meet with you and help you gameplan for the future and understand the local multifamily market so you can analyze what type of property you'd like to purchase when you're ready to pull the trigger.

@Wes Blackwell just saw your post - I am currently looking for cash flow positive deals in Sacramento, would you like to connect and share your info? I'm purely investing and not hacking though.

Hey @Wen Guo ! Just sent you a colleague request with a private message. Anyone else who sees this post down the line can send me a p.m. on here or contact me via the info on my profile.

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