HOUSEHACKING! New baby & job changes on the way

[Ben Peterson]

Hi everyone! I'm 26 years old my wife is 29. We have been travel nursing for the last 2 years and have a pretty great cash pile to get started in RE. We were planning on traveling longer, BUT, just found out we're expecting!! Odds are we will need to reel in our wander lust and settle back down where it all started in Akron, OH. This also means we'll be taking huge pay cuts. 

My main goal for us is to find a 2-4 unit (preferably turnkey) and live in one side for a year or so before refinancing and scaling. An issue I am running into in my market though is high listing prices and lower rents not meeting the 1% rule. Those that do meet the 1% rule are value adds that will need more work than I can put in right now. I almost bought one for $220k but realized that particular neighborhood was saturated with vacant units up for rent WAY below what I would need to cash flow (even after rehab). 

I found another more updated duplex in a great area. It is listed for $285,000 and one side is already renting for $1,100 until 2024. Newly renovated; turnkey, double garages etc. If we live on one side we will still be paying $835/mo plus utilities! This seems like a lot for house hacking? Is the asking price outrageous, is the rent too low, or are these situations the new normal??

Thanks!

Cliffs:

-Travel nurses; lots of cash

-Found out we're pregnant! Gotta settle down

-Househacking seems like the best move. Place to live + offset mortgage.

-Having trouble finding properties near me that cash flow/offset mortgage. i.e. still paying 1/2 PITI

-Am I finding bad deals or am I being too picky?

[Steven Foster Wilson]

Quote from @Ben Peterson:

Hi everyone! I'm 26 years old my wife is 29. We have been travel nursing for the last 2 years and have a pretty great cash pile to get started in RE. We were planning on traveling longer, BUT, just found out we're expecting!! Odds are we will need to reel in our wander lust and settle back down where it all started in Akron, OH. This also means we'll be taking huge pay cuts. 

My main goal for us is to find a 2-4 unit (preferably turnkey) and live in one side for a year or so before refinancing and scaling. An issue I am running into in my market though is high listing prices and lower rents not meeting the 1% rule. Those that do meet the 1% rule are value adds that will need more work than I can put in right now. I almost bought one for $220k but realized that particular neighborhood was saturated with vacant units up for rent WAY below what I would need to cash flow (even after rehab). 

I found another more updated duplex in a great area. It is listed for $285,000 and one side is already renting for $1,100 until 2024. Newly renovated; turnkey, double garages etc. If we live on one side we will still be paying $835/mo plus utilities! This seems like a lot for house hacking? Is the asking price outrageous, is the rent too low, or are these situations the new normal??

Thanks!

Cliffs:

-Travel nurses; lots of cash

-Found out we're pregnant! Gotta settle down

-Househacking seems like the best move. Place to live + offset mortgage.

-Having trouble finding properties near me that cash flow/offset mortgage. i.e. still paying 1/2 PITI

-Am I finding bad deals or am I being too picky?

 Wow! That is a lot, congratulations on expecting. I am assuming you are choosing Akron because of family? I know a lot of nurses that work in Columbus and make great money as well as even in Cleveland because of the big hospitals. Have you looked at rents for that area of the property you are talking about? I would go off of what the comparables are. Real estate is a lot of times a number game. 

[Billy Daniel]

The 1% rule is slowly becoming archaic.  It's not impossible, but it is very difficult to find properties that meet it.  

As for finding a property, make sure the property cash flows with all units rented (i.e. after you leave).  This is key.  A house hack isn't necessarily about having no mortgage payment, just a reduced one.  Another important thing to remember is that list prices are suggestions, not rules.  If they are wanting $285k, but the numbers only work at $250k, write the offer for $250k and see what happens.  Don't just throw out low ball offers to see what sticks though.  Run your analysis and do what makes sense for you!

Good luck!

[Brittany Minocchi]

Although you're reducing your mortgage payment by living in one of the units, if you're only collecting $2,200 in rent once you're moved out, it doesn't sound like you'll be cash flowing (assuming at least average credit and minimum down payment). Around $1800 would go to just P&I without factoring in taxes and insurance. I can probably guess the area it's in based on your comment that it's a great area, and if I'm right, I'm willing to bet the taxes aren't cheap. That makes me think you'll have to raise rent a considerable amount to make it make sense. 

[Ben Peterson]

Quote from @Steven Foster Wilson:

Quote from @Ben Peterson:

Hi everyone! I'm 26 years old my wife is 29. We have been travel nursing for the last 2 years and have a pretty great cash pile to get started in RE. We were planning on traveling longer, BUT, just found out we're expecting!! Odds are we will need to reel in our wander lust and settle back down where it all started in Akron, OH. This also means we'll be taking huge pay cuts. 

My main goal for us is to find a 2-4 unit (preferably turnkey) and live in one side for a year or so before refinancing and scaling. An issue I am running into in my market though is high listing prices and lower rents not meeting the 1% rule. Those that do meet the 1% rule are value adds that will need more work than I can put in right now. I almost bought one for $220k but realized that particular neighborhood was saturated with vacant units up for rent WAY below what I would need to cash flow (even after rehab). 

I found another more updated duplex in a great area. It is listed for $285,000 and one side is already renting for $1,100 until 2024. Newly renovated; turnkey, double garages etc. If we live on one side we will still be paying $835/mo plus utilities! This seems like a lot for house hacking? Is the asking price outrageous, is the rent too low, or are these situations the new normal??

Thanks!

Cliffs:

-Travel nurses; lots of cash

-Found out we're pregnant! Gotta settle down

-Househacking seems like the best move. Place to live + offset mortgage.

-Having trouble finding properties near me that cash flow/offset mortgage. i.e. still paying 1/2 PITI

-Am I finding bad deals or am I being too picky?

 Wow! That is a lot, congratulations on expecting. I am assuming you are choosing Akron because of family? I know a lot of nurses that work in Columbus and make great money as well as even in Cleveland because of the big hospitals. Have you looked at rents for that area of the property you are talking about? I would go off of what the comparables are. Real estate is a lot of times a number game. 

 Definitely could check out Cleveland! It's only an hour from family and there are great hospitals; i.e. Cleveland Clinic. I am not as familiar with the CLE area but may need to connect with an agent who is! Any suggestions?

[Ben Peterson]

Quote from @Brittany Minocchi:

Although you're reducing your mortgage payment by living in one of the units, if you're only collecting $2,200 in rent once you're moved out, it doesn't sound like you'll be cash flowing (assuming at least average credit and minimum down payment). Around $1800 would go to just P&I without factoring in taxes and insurance. I can probably guess the area it's in based on your comment that it's a great area, and if I'm right, I'm willing to bet the taxes aren't cheap. That makes me think you'll have to raise rent a considerable amount to make it make sense. 

Correct, or go way below asking. I virtually toured one side today and it is massive on the inside! 2BR/1.5 bath, double garage per side, full kitchen/appliances. I just can't believe the other side is only $1100 (unless it's not renovated; I didn't see it) and is locked in until 2024.

I feel the clock is ticking to find a suitable place. Ugh!  

[Steven Foster Wilson]

Quote from @Ben Peterson:

Quote from @Steven Foster Wilson:

Quote from @Ben Peterson:

Hi everyone! I'm 26 years old my wife is 29. We have been travel nursing for the last 2 years and have a pretty great cash pile to get started in RE. We were planning on traveling longer, BUT, just found out we're expecting!! Odds are we will need to reel in our wander lust and settle back down where it all started in Akron, OH. This also means we'll be taking huge pay cuts. 

My main goal for us is to find a 2-4 unit (preferably turnkey) and live in one side for a year or so before refinancing and scaling. An issue I am running into in my market though is high listing prices and lower rents not meeting the 1% rule. Those that do meet the 1% rule are value adds that will need more work than I can put in right now. I almost bought one for $220k but realized that particular neighborhood was saturated with vacant units up for rent WAY below what I would need to cash flow (even after rehab). 

I found another more updated duplex in a great area. It is listed for $285,000 and one side is already renting for $1,100 until 2024. Newly renovated; turnkey, double garages etc. If we live on one side we will still be paying $835/mo plus utilities! This seems like a lot for house hacking? Is the asking price outrageous, is the rent too low, or are these situations the new normal??

Thanks!

Cliffs:

-Travel nurses; lots of cash

-Found out we're pregnant! Gotta settle down

-Househacking seems like the best move. Place to live + offset mortgage.

-Having trouble finding properties near me that cash flow/offset mortgage. i.e. still paying 1/2 PITI

-Am I finding bad deals or am I being too picky?

 Wow! That is a lot, congratulations on expecting. I am assuming you are choosing Akron because of family? I know a lot of nurses that work in Columbus and make great money as well as even in Cleveland because of the big hospitals. Have you looked at rents for that area of the property you are talking about? I would go off of what the comparables are. Real estate is a lot of times a number game. 

 Definitely could check out Cleveland! It's only an hour from family and there are great hospitals; i.e. Cleveland Clinic. I am not as familiar with the CLE area but may need to connect with an agent who is! Any suggestions?

 I help clients every day buy properties in Cleveland. I will send you a DM.

[Dave Skow]

@Ben Peterson- congrats and good post .....I went to Miami U so not far from Akron/ Fairlawn ... wifes from Medina....Are you getting " non travel "   RN  posiitons  ?  if so - that is a  goos thing as  many lenders  tend to have a  challenge  with  the " travelling "  RN  job  and  qualifying  with this income  ....make sure that you get  formally pre approved  for whatever scenario you are working with- good luck

[Ryan Thomson]

@Ben Peterson I think you are being too picky. 

House hacking is tough to cashflow in year one (with current house price run-ups and interest rates) for a couple reasons:

1. You are living in one of the rentable units

2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

Lower your standards and get into a house hack that will allow you to avoid throwing rent money away every month. You know this, but don't forget all the other ways real estate makes you money. Paying down your mortgage and owning an asset that will appreciate over the long term. 

[William Broxson]

that actually doesn't sound like a great deal to me unless the side your getting better in some way. $1100 say the other side rents for the same so $2200 or $26,400 yearly/285k asking id only 9 % gross cap? unless its just a really really nice place that you think would be good for your family. I always shoot for at least 15% when helping my buyers.

[Simon Ashbaugh]

Quote from @Ben Peterson:

Hi everyone! I'm 26 years old my wife is 29. We have been travel nursing for the last 2 years and have a pretty great cash pile to get started in RE. We were planning on traveling longer, BUT, just found out we're expecting!! Odds are we will need to reel in our wander lust and settle back down where it all started in Akron, OH. This also means we'll be taking huge pay cuts. 

My main goal for us is to find a 2-4 unit (preferably turnkey) and live in one side for a year or so before refinancing and scaling. An issue I am running into in my market though is high listing prices and lower rents not meeting the 1% rule. Those that do meet the 1% rule are value adds that will need more work than I can put in right now. I almost bought one for $220k but realized that particular neighborhood was saturated with vacant units up for rent WAY below what I would need to cash flow (even after rehab). 

I found another more updated duplex in a great area. It is listed for $285,000 and one side is already renting for $1,100 until 2024. Newly renovated; turnkey, double garages etc. If we live on one side we will still be paying $835/mo plus utilities! This seems like a lot for house hacking? Is the asking price outrageous, is the rent too low, or are these situations the new normal??

Thanks!

Cliffs:

-Travel nurses; lots of cash

-Found out we're pregnant! Gotta settle down

-Househacking seems like the best move. Place to live + offset mortgage.

-Having trouble finding properties near me that cash flow/offset mortgage. i.e. still paying 1/2 PITI

-Am I finding bad deals or am I being too picky?

 Congrats on the baby! Look into going up to Cleveland! Rents are far, far better, and you have some of the best hospitals in the country!

[Ben Peterson]

Quote from @Simon Ashbaugh:

Quote from @Ben Peterson:

Hi everyone! I'm 26 years old my wife is 29. We have been travel nursing for the last 2 years and have a pretty great cash pile to get started in RE. We were planning on traveling longer, BUT, just found out we're expecting!! Odds are we will need to reel in our wander lust and settle back down where it all started in Akron, OH. This also means we'll be taking huge pay cuts. 

My main goal for us is to find a 2-4 unit (preferably turnkey) and live in one side for a year or so before refinancing and scaling. An issue I am running into in my market though is high listing prices and lower rents not meeting the 1% rule. Those that do meet the 1% rule are value adds that will need more work than I can put in right now. I almost bought one for $220k but realized that particular neighborhood was saturated with vacant units up for rent WAY below what I would need to cash flow (even after rehab). 

I found another more updated duplex in a great area. It is listed for $285,000 and one side is already renting for $1,100 until 2024. Newly renovated; turnkey, double garages etc. If we live on one side we will still be paying $835/mo plus utilities! This seems like a lot for house hacking? Is the asking price outrageous, is the rent too low, or are these situations the new normal??

Thanks!

Cliffs:

-Travel nurses; lots of cash

-Found out we're pregnant! Gotta settle down

-Househacking seems like the best move. Place to live + offset mortgage.

-Having trouble finding properties near me that cash flow/offset mortgage. i.e. still paying 1/2 PITI

-Am I finding bad deals or am I being too picky?

 Congrats on the baby! Look into going up to Cleveland! Rents are far, far better, and you have some of the best hospitals in the country!

 Starting to thing that may be the move. Any areas/neighborhoods you recommend so I don't look in the wrong part of town? lol

[Ben Peterson]

Quote from @Ryan Thomson:

@Ben Peterson I think you are being too picky. 

House hacking is tough to cashflow in year one (with current house price run-ups and interest rates) for a couple reasons:

1. You are living in one of the rentable units

2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

Lower your standards and get into a house hack that will allow you to avoid throwing rent money away every month. You know this, but don't forget all the other ways real estate makes you money. Paying down your mortgage and owning an asset that will appreciate over the long term. 

I may be. I also never mentioned putting down 5%. I would be putting down 20% conventional

[James Wise]

Quote from @Ben Peterson:

Hi everyone! I'm 26 years old my wife is 29. We have been travel nursing for the last 2 years and have a pretty great cash pile to get started in RE. We were planning on traveling longer, BUT, just found out we're expecting!! Odds are we will need to reel in our wander lust and settle back down where it all started in Akron, OH. This also means we'll be taking huge pay cuts. 

My main goal for us is to find a 2-4 unit (preferably turnkey) and live in one side for a year or so before refinancing and scaling. An issue I am running into in my market though is high listing prices and lower rents not meeting the 1% rule. Those that do meet the 1% rule are value adds that will need more work than I can put in right now. I almost bought one for $220k but realized that particular neighborhood was saturated with vacant units up for rent WAY below what I would need to cash flow (even after rehab). 

I found another more updated duplex in a great area. It is listed for $285,000 and one side is already renting for $1,100 until 2024. Newly renovated; turnkey, double garages etc. If we live on one side we will still be paying $835/mo plus utilities! This seems like a lot for house hacking? Is the asking price outrageous, is the rent too low, or are these situations the new normal??

Thanks!

Cliffs:

-Travel nurses; lots of cash

-Found out we're pregnant! Gotta settle down

-Househacking seems like the best move. Place to live + offset mortgage.

-Having trouble finding properties near me that cash flow/offset mortgage. i.e. still paying 1/2 PITI

-Am I finding bad deals or am I being too picky?

 Welcome aboard Ben.

[Jaron Walling]

@Ben Peterson $835 per month... how much is rent for a comparable size property? 

(the answer is more) 

[Jaron Walling]

@Ben Peterson I love your thread post and investment situation. House hacking is a great choice so don't get discouraged. Just keep searching for motivated sellers. THEY ARE OUT THERE. A house is only worth what someone is willing to offer. Make lower offers. 

My first property (now a rental) was ugly, outdated, but qualified for a conventional loan. It was pending once and back on market for 45 days. I offered $25k below ask. Search for high days on market. There's a few them right now but not for ever. The markets are going to get busy again in the spring. You'll start seeing less days on market, bidding wars, and limited inspections.