My wife and I have around 22K saved up and we want to try to house hack. We are both brand new to real estate investing. We have a baby on the way so are mostly looking at multi-family homes. The real estate marked in the Chattanooga/Cleveland TN area is crazy right now and everything is up by about 40%. Obviously we would need to look for a great deal and that leads me to my question: Is house hacking only worth doing if you make a profit or break even? My wife thinks that even if we have to pay $300 out of our pockets for the mortgage, then it's still a good idea to do. I know it would be good to have as a rental when we move out after a year or two, but we wouldn't have any more money but our savings to put towards another investment later if we weren't making a profit. I appreciate any insight!
Investor · San José, CA · Member since 2022 · 9 posts · 16 votes
4y
Will caveat this with everyone’s goals and idea of a “good deal” will be different. When it comes to house hacking, the ultimate goal is indeed to live for free/ make profit, but by no means is having to come out a pocket for a small amount a loss. If that amount is significantly less than rent you would have had to pay, then you are “making” money through the money saved (this is not even accounting for equity you are building). You would definitely want to underwrite the deal for when you move out in the future to ensure it make sense, but there is nothing wrong with house-hacking for more than 1 year to build up savings to snatch up the next property.
Investor · San José, CA · Member since 2022 · 9 posts · 16 votes
4y
Will caveat this with everyone’s goals and idea of a “good deal” will be different. When it comes to house hacking, the ultimate goal is indeed to live for free/ make profit, but by no means is having to come out a pocket for a small amount a loss. If that amount is significantly less than rent you would have had to pay, then you are “making” money through the money saved (this is not even accounting for equity you are building). You would definitely want to underwrite the deal for when you move out in the future to ensure it make sense, but there is nothing wrong with house-hacking for more than 1 year to build up savings to snatch up the next property.
My wife and I have around 22K saved up and we want to try to house hack. We are both brand new to real estate investing. We have a baby on the way so are mostly looking at multi-family homes. The real estate marked in the Chattanooga/Cleveland TN area is crazy right now and everything is up by about 40%. Obviously we would need to look for a great deal and that leads me to my question: Is house hacking only worth doing if you make a profit or break even? My wife thinks that even if we have to pay $300 out of our pockets for the mortgage, then it's still a good idea to do. I know it would be good to have as a rental when we move out after a year or two, but we wouldn't have any more money but our savings to put towards another investment later if we weren't making a profit. I appreciate any insight!
Multi family is terrible. It means you're renting to one family for one unit instead of several individuals maximizing the space by renting out the living/dining/rec rooms as bedrooms. Then there's the basement. If you have the ceiling height it must be used. You need to retrofit that as soon as possible. You have a young wife and child coming. So just take one floor for yourself. Its not maximizing things but its still pretty good. Instead of a multi family duplex/triplex consider a bigger house with more rooms. If you can occupy a small percentage of the total and you're in a reasonably priced area with strong rental demand you'll live for free easily. The challenge is living for free AND paying that mortgage off fast, like in 5-10 years. Because we have no idea how high interest rates are going. I'd want to lock in my rate as long as possible and pay it off as fast as possible.
Real Estate Agent · Addison, IL · Member since 2015 · 185 posts · 88 votes
4y
@Jordan Santley you have to look at two things
1-will you Cashflow after you move out?
2-will you be paying less house hacking then you would if you rented or bought another property?
If you’re answer is yes then it’s a good idea. There are no set rules, I know people always say they househack for free but that’s not always the case since not everybody finds the same deal