House Hacking in Atlanta ?

Question

Looking to purchase my first property and I’m looking to do a house hack (live in one unit and rent the other out.) I also have a roommate that might possibly be living in one of the units with me, so I’ll also be using the rent by room strategy to increase my cash flow even more. I’m wondering a few things.

I want to buy a house that can bring me in positive cash flow, but since I’m doing a house hack do I just need to buy a property that’s already in shape ?

Has anyone done their house hack analysis on a BiggerPockets calculator ?

Has anyone house hacked in Atlanta before or can share their stories on their first house hack ?

Thanks, would love to connect !!!!

Brenden Mitchum · Answer

@Marcus Bennett Happy to help!

Keep in mind that using hard money sort of defeats the purpose here. When you refinance, you'll only be able to pull out 75-80% of the equity, which is the same whether you occupy the property yourself or not. That's why house hack BRRRRing only really works with a reno loan or a regular owner-occupied loan and then refinance after a year or two after making some upgrades.

Marcus Bennett · Answer

Thank you'll for the advice. I'm still learning to work the site but I can start here. Thank you so much for the advice @Brenden Mitchum my first goal was to have the property cash flowing while occupying, but to be honest I really just want to breakeven to reduce my current monthly housing expenses because I know Atlanta is a heavy market. Also after I live in it for a year or two, I can rent the unit I'm occupying out.

While I don't have the funds right now to fund a big project, I do have two hard money lenders who I can possibly bring deals to. I think your advice put me in a great new mindset to move forward, thank you a lot.

Brenden Mitchum · Answer

Hey @Marcus Bennett, welcome to the BP community!

As others have mentioned, it all depends on your criteria. Obviously, you should strive to cash flow once both sides are rented. The question is, what do you want your return to look like while you're living there? Do you want to cash flow, break even, just cover PITI, or simply just cover some of your mortgage to reduce monthly expenses and build equity in your first investment? The answer to this question will have a big impact on whether or not you're able to find something in this market. Atlanta (and most of the U.S.) has lost its marbles but house hacking is a strategy that can still work, if your criteria is not too strict.

When we started looking for a house hack last year my criteria was to cash flow while occupying the property (and it had to be a small MF). I had read/heard so many stories about folks who had done exactly this over the years and my goal was to do the same. After months of searching, I realized that I would need to change my criteria or risk never getting started. I know, people say "don't sacrifice on your criteria." However, when you criteria is built on stories told by folks who purchased in the beginning/middle of this never ending up-cycle, there is probably some room for adjustment. This was true in my case as I realized that I could find a SFR with a mother-in-law suite (tons of these in ATL) and cover my mortgage with rent from the other side. I decided this was enough for me to at least get in the game. Once we move out, it will cash flow well and that's what is most important to me.

You're on the right track though - just make sure you don't lose site of what your long-term goals are. Set your criteria and expectations according to this and the current market and start looking for that house hack!

Feel free to reach out anytime if you have questions along the way!

Matthew Brill · Answer

It depends on your goals and what is a deal for you as there are many ways to win with a house hack. I also have a house hacking calculator that I have created. Happy to connect if you're interested.

Zach Schaphorst · Answer

First house hack (before I knew that was the term for it) I did an FHA loan with 10% down and I was pretty much breaking even while living there and renting rooms out to three friends. Was perfect for me at the time because I got some experience managing tenants and it dropped my monthly housing expense a fair bit while I got to build some equity. As a lender now I feel like the house probably barely qualified for FHA financing, those loans require a more move in ready house which it was but a lot of the big ticket items needed to be replaced within 2 years (HVAC, roof etc). If you have a strong credit/work history I'd recommend conventional as you'll have more options on houses, and I know those loans are being looked upon more favorably right now.

In the current market in Atlanta I think you're gonna have a tough time finding a cash-flowing property if you're living in a room unless you have money for a big down-payment, but it might be worth it if it's at least cutting down your monthly housing expense. Like @Nicolas Nuvan said having a good realtor is key for a number of reasons- beyond negotiating on your behalf and walking you through the buying process they can give you a realistic idea on rents in the area and usually can help you with drawing up leases (which I didn't do initially but that you definitely need to do if you want to build a portfolio).

Nicolas Nuvan · Answer

The way to run the #'s on properties is pretty much universal. But I would connect with a good Real Estate Agent in the area so they can run the #'s for you. Saves you a lot of time.

Then once they find properties that match your goal monthly returns, you can check their work.

As far as the condition of the property, it depends on how much cash on hand you have to potentially do any renovations. If you have only enough for down payment and closing costs, I'd go with something that needs less work. Feel free to text me if you want a referral in your area.

Sher J. · Answer

Hey Marcus, I am doing a househack now with a small MF. Feel free to send me a message with any questions.

Marcus Bennett · Answer

@Nicolas Nuvan would definitely be interested in connecting and talking more about this. thank you for the reply will be contacting you today

Marcus Bennett · Answer

@Zach Schaphorst thank you so much Zach for the story, it's sometimes better for me to hear from personal experience to gain some confidence and insight. Since this would be my first property, I'm not looking for a homerun but more of something to start. I don't mind breaking even while occupying a unit because I eventually want to move out in a year or two. Would definitely want to connect and thank you for the advice again.

Marcus Bennett · Answer

@Matthew Brill I want to cash flow the property but since I'll be occupying one unit, I'm fine with breaking even or just reducing my monthly expense while building some equity. I would be more than appreciative to connect with you and check out your calculator out if possible.

House Hacking in Atlanta ?

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