Feedback on househacking

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Feedback on househacking

Andrew Stephens
Rental Property Investor · Tacoma, WA · Member since 2020 · 5 posts · 4 votes

Good morning all,

It’s a slow day at work and I’m looking at my finances to be able to buy a property soon. I am 19 so I have some time but I am struggling to save money to pay for a down payment but want to invest quick.

I have about 3,500 in assets and stocks but would like to keep those long term and I have about 2000 in cash.

Finding a property in Tacoma Wa in my price range is starting to become a challenge and I’m thinking about a townhouse for a first house hack.

If anyone knows a good way to get down payment assistance or househacking a townhouse or condo I’d like to get in touch.

Any tips on house hacking in an expensive would be greatly appreciated.

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Michael HaasBusiness Member
Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
5y

Hey @Andrew Stephens - congrats on starting early! My wife and I bought our first househack at 21 years old, but you've got us beat at 19.

You'd be able to find a deal for that amount of cash if you were to use a downpayment assitance program, like the one offered by the Washington State Housing Finance Commission. WSHFC is a non-profit dedicated to helping every Washingtonian own their own home, and this program allows us to take out a loan with 3% down, then get 4% down payment assistance so the cash required to close is super-minimal (as little as $6,000 in some cases, depends on the purchase price of the property though).

This strategy works really well when you can combine it with house hacking. One reason this works so well is that owner-occupant financing (when you live in the house) has lower interest rates than investor/landlord financing, so you get the best of both worlds if you rent part of your primary residence out – rental income, tax deductions, and low interest rates on your home loan.

Here’s the info on the program: http://www.wshfc.org/buyers/do... . You need to attend a homebuyer’s class taught by a WSHFC trained Realitor and Lender, I’m trained and am teaching a few of these early next year. Message me if you’re interested and want me to send you details once the location and time of those Homebuyer classes is set, and if you have any questions about how this works. Always happy to grab a coffee or chat on the phone as well.

[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
WebsiteView Page
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  • Joel Calkins
    Real Estate Agent · Member since 2020 · 139 posts · 103 votes
    5y

    Hey Andrew, I applaud you for wanting to get into real estate so early.

    I'm not sure what your specific market looks like or what an MFR/ rent by the rooming house looks like in your area but you will have to get creative with financing. Luckily since you're looking to house hack you are able to go with an FHA-style loan. At the lowest, you're looking at 3.5% down. This is of course dependent on your creditworthiness and DTI ratio.

    As for condos/townhomes. I may be biased against condos but they are usually tricky to make cash flow. Also, there may be restrictions on sub-letting in a condo/townhome. Although the repair costs can be low and someone comes to mow the grass the HOA usually eats away at your cash flow.

    Do your due diligence and compare the two options. 

    Feel free to contact me with any of you REI related questions. Goodluck man!

    0Reply
  • Brad HammondBusiness Member
    Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
    5y

    Hey @Andrew Stephens. I got started investing with condos and like them if you can find one with low HOA fees. These are usually smaller buildings. Considering HOAs usually pay for water, sewer, trash, and roof replacement you might not be paying that much more per month.

    For down payment assistance, you can look into local grants but oftentimes these are for low-income people and restrict you to certain areas. 

    As far as closing costs go, you can roll that into the purchase price however there are some downsides to that.  1. Your monthly mortgage will be higher,  2. It isn't as strong of an offer if you are in a competitive offer situation, 3. The property will need to appraise for the total amount (including the down payment) so keep that in mind as well.  

    0Reply
  • Andrew Stephens
    OP
    Rental Property Investor · Tacoma, WA · Member since 2020 · 5 posts · 4 votes
    5y

    @Brad Hammond

    Thanks for the tips on the down payment and condos.

    Do you mind if I send you a message and pick your brain?

    1Reply
  • Andrew Stephens
    OP
    Rental Property Investor · Tacoma, WA · Member since 2020 · 5 posts · 4 votes
    5y

    @Joel Calkins

    Key Joel, thanks for the tips is it alright if I send you a message?

    0Reply
  • Joel Calkins
    Real Estate Agent · Member since 2020 · 139 posts · 103 votes
    5y


    @Andrew Stephens

    Absolutely!

    0Reply
  • Brad HammondBusiness Member
    Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
    5y

    Absolutly.  

    0Reply
  • Michael HaasBusiness Member
    Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
    5y

    Hey @Andrew Stephens - congrats on starting early! My wife and I bought our first househack at 21 years old, but you've got us beat at 19.

    You'd be able to find a deal for that amount of cash if you were to use a downpayment assitance program, like the one offered by the Washington State Housing Finance Commission. WSHFC is a non-profit dedicated to helping every Washingtonian own their own home, and this program allows us to take out a loan with 3% down, then get 4% down payment assistance so the cash required to close is super-minimal (as little as $6,000 in some cases, depends on the purchase price of the property though).

    This strategy works really well when you can combine it with house hacking. One reason this works so well is that owner-occupant financing (when you live in the house) has lower interest rates than investor/landlord financing, so you get the best of both worlds if you rent part of your primary residence out – rental income, tax deductions, and low interest rates on your home loan.

    Here’s the info on the program: http://www.wshfc.org/buyers/do... . You need to attend a homebuyer’s class taught by a WSHFC trained Realitor and Lender, I’m trained and am teaching a few of these early next year. Message me if you’re interested and want me to send you details once the location and time of those Homebuyer classes is set, and if you have any questions about how this works. Always happy to grab a coffee or chat on the phone as well.

    [email protected]408-439-7873
    HouseHack Seattle | Michael Haas & Team572 Reviews
    WebsiteView Page
    5Reply
  • Jordan Murrell
    Las Vegas, NV · Member since 2020 · 162 posts · 113 votes
    5y

    @Andrew Stephens

    Hey Andrew,

    The fact that you’re looking into real estate at 19 has me envious!

    For your house hacking situation, I’ve seen a lot of people rent by the room or purchase a small multifamily (2-4 units). Live on one side and rent out the other unit(s).

    There are also grants you can receive as a first time homebuyer through different programs like NACA & FHA down payment assistance programs.

    Definitely take a look at those.

    If you are going the FHA route, you can also get the down payment from a family member or close relative/ friend. Speak to your lender about the different options.

    Goodluck !

    1Reply
  • Jacob Lapp
    Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes
    5y

    @Andrew Stephens

    Have you considered getting your real estate license? With that amount of capital you may have a hard time getting your first property. However, making the investment to become licensed, learning that side of the business, potentially using your license to create more wealth and eventually making 2-3% on all the properties you buy in the future.

    I got my real estate license at 21 did my first house hack on a triplex at 22, did my second house hack on a duplex at 23. Now I am 24 looking to do my next deal living for free ($1100 a month value) with a passive income of $1800 a month. In the next 2 years I plan on having 6-7 more units and once I move out, have over $5000 in passive income. Best of luck to you!

    1Reply
  • Sherief Elbassuoni
    Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
    5y

    @Andrew Stephens, it is awesome that you started thinking about real estate investing while still at 19 yo. There are different programs that can help you with that. One of them is WA Housing Finance Commission http://www.wshfc.org/buyers/do.... USDA loans are another option for you, but they are more suitable for rural areas. You can read more about the USDA loan in here https://www.rd.usda.gov/progra.... There are some other places that provide downpayment assistance like the "homebuyer down payment assistance program" from Pierce county. You can read more about this program in here https://www.co.pierce.wa.us/48....Feel free to reach out if you got any questions about these assistance programs. 

    0Reply
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