House Hacking SFR in LA county

[Zachary Shelley]

Hello everyone! I'm considering house hacking a SFR with my VA loan in LA county by renting out individual rooms and was wondering if any of you had experience at doing this in the past? I'm currently single with no dependents and rent a house with some friends, but am exploring all my options going forwards. Any advice would be great! Would be happy to connect and hear about anyone's personal experience.

[Erik Estrada]

Hey Zachary, 

Have you looked into SFRs with an ADU? You can use 75% of the expected rents to qualify for the loan.

Where in LA County are you looking? Also what have you been approved for? 

[Erik Estrada]

Happy to connect you with agents I know that do house hacks themselves. 

[Monica Der]

Hi Zachary,

I think it's a great idea! Let me know if you need any help locating FHA approved listings or need help with pre-approval. You might also consider a duplex, triplex or fourplex so you can reach your goals faster and have more privacy. Some of these duplexes can host an entire family and command much higher rents!

[Mel D.]

Quote from @Monica Der:

Hi Zachary,

I think it's a great idea! Let me know if you need any help locating FHA approved listings or need help with pre-approval. You might also consider a duplex, triplex or fourplex so you can reach your goals faster and have more privacy. Some of these duplexes can host an entire family and command much higher rents!

I've been informed that in Los Angeles, tri- and fourplexes are more difficult to qualify for. You have to put 20% down because of the risk of the not being able to fulfil the financial requirements 

[Robert Reynolds]

The self-sustainability rule doesn't apply for VA loans, only FHA loans to my understanding. House Hacking with your VA loan is a great idea, there are some difficulties that may come along with getting a seller to want to take a VA loan offer vs an FHA or Conventional, but my team has had good success doing it. Hit me up with any questions. I house hacked my first house before it was called house hacking and it's a great way to save up for your next house and reduce housing expenses.

[Monica Der]

Quote from @Mel D.:

Quote from @Monica Der:

Hi Zachary,

I think it's a great idea! Let me know if you need any help locating FHA approved listings or need help with pre-approval. You might also consider a duplex, triplex or fourplex so you can reach your goals faster and have more privacy. Some of these duplexes can host an entire family and command much higher rents!

I've been informed that in Los Angeles, tri- and fourplexes are more difficult to qualify for. You have to put 20% down because of the risk of the not being able to fulfil the financial requirements 

 Hi Mel!

FHA loans are something you can apply for for 1-4 unit residential income properties in Los Angeles, let me know if you want to reach out to my mortgage broker for more information

Here are the limits for each type https://www.fha.com/lending_li...

LOS ANGELES County
LOS ANGELES-LONG BEACH-ANAHEIM, CA
Single	Duplex	Tri-plex	Four-plex
$1,089,300	$1,394,775	$1,685,850	$2,095,200

[Zachary Shelley]

Quote from @Erik Estrada:

Hey Zachary, 

Have you looked into SFRs with an ADU? You can use 75% of the expected rents to qualify for the loan.

Where in LA County are you looking? Also what have you been approved for? 

 I think that is my ideal situation, but most properties that I've been seeing with ADUs are listed as duplexes. Maybe I am not filtering correctly. I work in El Segundo and am trying to keep my commute within 30-40 minutes max so I have a pretty wide area right now. I'm not opposed to continuing to rent with a couple friends if the right opportunity doesn't comes along, but I am evaluating my options

[Zachary Shelley]

Quote from @Robert Reynolds:

The self-sustainability rule doesn't apply for VA loans, only FHA loans to my understanding. House Hacking with your VA loan is a great idea, there are some difficulties that may come along with getting a seller to want to take a VA loan offer vs an FHA or Conventional, but my team has had good success doing it. Hit me up with any questions. I house hacked my first house before it was called house hacking and it's a great way to save up for your next house and reduce housing expenses.

That's the objective. I've considered getting a condo with a mortgage payment in-range of what I am currently paying in rent if I cannot house hack and then either selling it or renting it out when I move, but ideally can find a SFR with an ADU so I have some more privacy with the additional appreciation potential.

[Zachary Shelley]

Quote from @Monica Der:

Hi Zachary,

I think it's a great idea! Let me know if you need any help locating FHA approved listings or need help with pre-approval. You might also consider a duplex, triplex or fourplex so you can reach your goals faster and have more privacy. Some of these duplexes can host an entire family and command much higher rents!

 Depending upon area and affordability I would much prefer a duplex, but I do not know if that is within my price range in LA at this point. I will keep my eye open though!

[Rick Albert]

I have a client who is doing it and did well. He bought back in 2020 of a SFR with an ADU. He and his family live in the main house and the back unit is rented.

The process of house hacking is fairly the same, it just comes down to the numbers. 

I've house hacked a condo and a house with ADU (built it out with the FHA 203(k) loan). It's doable depending on the location.

Do you have any specific questions related to the process? The VA loan can be tricky when buying condos because you either (1) have to make sure the complex is VA approved or the Seller is willing to allow a spot approval or (2) you can sign a waiver but once you do that you cannot do it for any other properties going forward.

[Ryan Thomson]

@Zachary Shelley nice! Smawt. My first two house hacks were rent by the room. I converted a garage into a STR that I managed while living in the house and renting out three bedrooms. They worked really well and still do to this day. This is one way to maximize a home's rental potential.

[Jonathan Y.]

Hey Zachary - I'm actually in the same boat as you. Currently looking for a SFR that has ADU opportunities whether that be a garage that can be converted or enough space in the lot for a free standing unit to be built out. I'm definitely seeing the market cooling down in our area (LA county) and I'm sure some great deals can be found. Will be following along in this thread...

[Zachary Shelley]

Quote from @Ryan Thomson:

@Zachary Shelley nice! Smawt. My first two house hacks were rent by the room. I converted a garage into a STR that I managed while living in the house and renting out three bedrooms. They worked really well and still do to this day. This is one way to maximize a home's rental potential.

I’d love to connect and hear how you managed this and got it to work effectively for you. I’d prefer to find an opportunity to live in an ADU while renting out a SFR, but renting rooms in a SFR is more affordable and very doable with the right knowledge and system in-place.

[Zachary Shelley]

Quote from @Jonathan Y.:

Hey Zachary - I'm actually in the same boat as you. Currently looking for a SFR that has ADU opportunities whether that be a garage that can be converted or enough space in the lot for a free standing unit to be built out. I'm definitely seeing the market cooling down in our area (LA county) and I'm sure some great deals can be found. Will be following along in this thread...

Appreciate the message! Hoping that more opportunities present themselves as the year goes on and my current lease gets closer to expiring in late July.

[Murad Clark]

Quote from @Zachary Shelley:

Hello everyone! I'm considering house hacking a SFR with my VA loan in LA county by renting out individual rooms and was wondering if any of you had experience at doing this in the past? I'm currently single with no dependents and rent a house with some friends, but am exploring all my options going forwards. Any advice would be great! Would be happy to connect and hear about anyone's personal experience.

Go for it! You have an awesome opportunity that will jump start your investing career. I wish you the best.

[Zachary Shelley]

Quote from @Rick Albert:

I have a client who is doing it and did well. He bought back in 2020 of a SFR with an ADU. He and his family live in the main house and the back unit is rented.

The process of house hacking is fairly the same, it just comes down to the numbers. 

I've house hacked a condo and a house with ADU (built it out with the FHA 203(k) loan). It's doable depending on the location.

Do you have any specific questions related to the process? The VA loan can be tricky when buying condos because you either (1) have to make sure the complex is VA approved or the Seller is willing to allow a spot approval or (2) you can sign a waiver but once you do that you cannot do it for any other properties going forward.

House hacking in a 2-4 unit or SFR w/ ADU to me is more straightforward in understanding a clear process and putting a system in place because it is closer to simply owning a rental, but renting out rooms is where I get hesitant. Whether it be in a 2 bed condo or a 3-4 bed SFR it seems more complicated to organize when sharing the same living space and I've read that property managers usually don't get involved in this type of arrangement leaving me on my own to deal with my "tenant" roommates. Not to say this is impossible by any means, but it adds a layer of complexity and, to me, has more potential for things to go wrong.

[Charles Renn]

Quote from @Zachary Shelley:

Hello everyone! I'm considering house hacking a SFR with my VA loan in LA county by renting out individual rooms and was wondering if any of you had experience at doing this in the past? I'm currently single with no dependents and rent a house with some friends, but am exploring all my options going forwards. Any advice would be great! Would be happy to connect and hear about anyone's personal experience.

 Hey Zach,

There is a ton of good info here. Like my teammate @Robert Reynolds mentioned, depending on your preapproval type, you'll want to focus on properties you can afford. We have a great lender who can strategize with you, if you haven't found one yet; one that knows VA loans.

In addition, @David Greene is coming to Anaheim in a few weeks to host a real estate meetup. Tickets are going quick but you can find details in the meetup tab on this website or I'm happy to send you the link. 

Hope to see you there and hope this helps!

[Rick Albert]

Quote from @Zachary Shelley:

Quote from @Rick Albert:

I have a client who is doing it and did well. He bought back in 2020 of a SFR with an ADU. He and his family live in the main house and the back unit is rented.

The process of house hacking is fairly the same, it just comes down to the numbers. 

I've house hacked a condo and a house with ADU (built it out with the FHA 203(k) loan). It's doable depending on the location.

Do you have any specific questions related to the process? The VA loan can be tricky when buying condos because you either (1) have to make sure the complex is VA approved or the Seller is willing to allow a spot approval or (2) you can sign a waiver but once you do that you cannot do it for any other properties going forward.

House hacking in a 2-4 unit or SFR w/ ADU to me is more straightforward in understanding a clear process and putting a system in place because it is closer to simply owning a rental, but renting out rooms is where I get hesitant. Whether it be in a 2 bed condo or a 3-4 bed SFR it seems more complicated to organize when sharing the same living space and I've read that property managers usually don't get involved in this type of arrangement leaving me on my own to deal with my "tenant" roommates. Not to say this is impossible by any means, but it adds a layer of complexity and, to me, has more potential for things to go wrong.

 When it comes to renting by the room, you are going to be self managing as I've never heard of a property manager willing to do it. I have clients that do it and I did it in a condo. It's not terribly difficult, just be organized. 

The complicated part (and why property managers likely don't deal with it) is when it comes to the deposit and what that goes towards. For example, if a kitchen cabinet is broken, who covers the cost? Because a property manager isn't there day to day, there isn't someone to hold that individual tenant accountable unless they take the blame for it.

[Matthew Kwan]

I did FHA with 3.5% and was able to land a triplex. There are multiple ways to strategize your first deal however make sure the number works. If you're bleeding cash on your first house, it would lead to a nightmare and maybe will keep you away from the RE game. You should try reaching out @Albert Bui or @Carlos Valencia as they both are in OC so if you need any guidance to start your house hacking journey feel free to reach out.

[Ryan Thomson]

@Zachary Shelley happy to talk! message me