Los Angeles, CA · Member since 2017 · 31 posts · 24 votes
Hi Guys! I am planning to buy a duplex using FHA loan so I can make a downpayment of 3.5%. Is it possible to keep the one unit vacant and not live in there? I just want to have the benefits of the low downpayment. (house hacking, los angeles, duplex)
cincinnati, OH · Member since 2016 · 25 posts · 119 votes
9y
Not sure why some of you feel the need to insult and patranize this man, he had a legitimate question. People should feel free to openly ask questions on BiggerPockets without being shamed. Many of us are at different levels in this game.
@Ben Leybovich given your "status" I would have expected more from you.
Lender · San Francisco, CA · Member since 2015 · 22 posts · 10 votes
9y
You definitely need to look more into the terms of an FHA loan before moving on this. Don't get yourself into something that a) won't make money given you're only renting out half of the building and 2) will get you foreclosed on for breaching the note you signed.
Real Estate Agent · Denver, CO · Member since 2014 · 151 posts · 101 votes
9y
What's your living situation now? One of the big benefits of house hacking is living for free while you're living in your house hack. If one of your units is empty, you're missing out on either free rent or rental income. I don't see why you would go through the hassle of owner-occupied financing if you aren't going to live there.
Not to mention it would be mortgage fraud not to live there if you got owner-occupied financing.
Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
9y
This is really competing for one of the stupidest things I've ever read on BP...lol
Seriously - you want to continue paying for your living expenses elsewhere, and too boot loose money on a duplex because you want to keep one side vacant, which is in clear violation of FHA guidelines, by the way...
Just flush your DP down the toilet. A hell of a lot less trouble that way. And you won't be breaking any laws :)
cincinnati, OH · Member since 2016 · 25 posts · 119 votes
9y
Not sure why some of you feel the need to insult and patranize this man, he had a legitimate question. People should feel free to openly ask questions on BiggerPockets without being shamed. Many of us are at different levels in this game.
@Ben Leybovich given your "status" I would have expected more from you.
Not sure why some of you feel the need to insult and patranize this man, he had a legitimate question. People should feel free to openly ask questions on BiggerPockets without being shamed. Many of us are at different levels in this game.
@Ben Leybovich given your "staus" I would have expected more from you.
Rickie - you think this was a legitimate question? We are at the hub of REI information here. Some baseline of aptitude is expected - don't you think? Where do we draw the line. Because if not, we are just spinning in circles :)
cincinnati, OH · Member since 2016 · 25 posts · 119 votes
9y
@Ben Leybovich
Not everyone's base knowledge is the same. Many are just getting started and lack the experience seasoned investors such as yourself have. I think its great you provided a response to his question, its just the way you responded that might make him or others think twice about reaching out for help again. I love that this forum, unlike many, is out to help others succeed, thank you for your time :)
Not everyone's base knowledge is the same. Many are just getting started and lack the experience seasoned investors such as yourself have. I think its great you provided a response to his question, its just the way you responded that might make him or others think twice about reaching out for help again. I love that this forum, unlike many, is out to help others succeed, thank you for your time :)
I understand this. However, everything starts with an intelligent question. I get that a newbie might not know that what he is suggesting is not lawful. I also understand that the numbers are hard, and so is management. I get all that, and I am here to help.
But, when using the term house hacking, how can a suggestion be made that he has no intention to move into it? Moving into the property is indeed the defining characteristic of what a house hack is, after all.
The key to an intelligent answer is an intelligent question, Rickie.
Take you, for example. Instead of telling me that I am rude, you are having a conversation with me and trying to understand why I said what I said. At least there is desire to converse, so thank you!
Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
9y
Another "can I skirt the FHA rules" post. This isn't the case of lack of knowledge, because if that were the case the question would never have been asked. @Ben Leybovich isn't being rude, he's shooting straight about what is clearly another post asking how to abuse a gov't funded program intended to increase home ownership accessibility.
@John Michael Rico You could leave a unit vacant and send your bills there and change your license to that address but live elsewhere. But you would be still committing fraud and be breaking the terms of your mortgage just as if you were renting the vacant unit to another person. Will you get caught? Who knows. Is it worth the risk? Either way, if you are investigated, don't think for a minute your plan will actually hold up in court or against any other review.
Flipper/Rehabber · Cleveland, OH · Member since 2017 · 2 posts · 2 votes
9y
@John Michael Rico That is definitely a worthy question to ask. First ill just say that my first income property was a duplex, and it still bring the the highest cash on cash return until this day. In regards to your question; you will have to weigh the risks vs. benefits by doing that. I actually know people that pulled off similar things without a problem. However that does not mean you should go out and do that. Also it would be very beneficial to you in many ways to live in the unit yourself.
Not everyone's base knowledge is the same. Many are just getting started and lack the experience seasoned investors such as yourself have. I think its great you provided a response to his question, its just the way you responded that might make him or others think twice about reaching out for help again. I love that this forum, unlike many, is out to help others succeed, thank you for your time :)
I understand this. However, everything starts with an intelligent question. I get that a newbie might not know that what he is suggesting is not lawful. I also understand that the numbers are hard, and so is management. I get all that, and I am here to help.
But, when using the term house hacking, how can a suggestion be made that he has no intention to move into it? Moving into the property is indeed the defining characteristic of what a house hack is, after all.
The key to an intelligent answer is an intelligent question, Rickie.
Take you, for example. Instead of telling me that I am rude, you are having a conversation with me and trying to understand why I said what I said. At least there is desire to converse, so thank you!
And for the OP - just read a little :)
Rickie - If someone isn't willing to spend ten minutes searching for an answer, they will fail in real estate investing. Before you slam on Ben, try doing a Google search on the term "house hacking". It took more time for him to post a question on BP than it would have taken to search and find the answer.
Real estate investing has many complexities and requires resourcefulness. It is too bad if Ben hurt his feelings, but it would be much worse if he finds himself in legal or financial trouble. This is a tough business and it that offended him, he has a long road ahead.
Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
9y
@Matt K. - This: "For all the people acting like this is a valid question... Please show me a example of house hacking that doesn't involve living in it." You said it much better than I, but that's the point. This is not simply missing the target - this is total lack of awareness of a target.
And I am just trying to wrap my head around how it is that on BP today, when seemingly literally 5% of all conversations revolve around house hacking, when Scott published his book and I published mine - how is it that such total lack of awareness of the basis of the concept can happen...
All people have to do is READ. That's why we write!