Interested in house hacking
Hello pros. Im a new pro member and I need some advice in order to start to be a real estate investor. I bought a 2 bed 2.5 bath townhouse in 2018 when I was still single and now that I have a growing family with my partner and babies we have been watching bigger pockets vlogs and it inspired us to try to live out of our comfort zone. I have a job that is enough to cover our mortgage and basics but we want to try house hacking or even short term rental. The challenges to that right now is that there are limited multi family units in a decent location that ranges from 750-950k. We dont have 5% downpayment. We have not even applied for preapproval yet but we’re just brainstorming. We’re thinking of selling this townhome to use the equity for a downpayment to move into a bigger home with adu or multifamily unit. We are just unsure if now is the right time for that. We are grateful just to get some ideas from the pros especially those pros in the local area.
#1 House Hacking Contributor
- Real Estate Agent
- Colorado Springs, CO
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#1 House Hacking Contributor
- Real Estate Agent
- Colorado Springs, CO
@Kristine O. great idea to keep getting educated and pursue house hacking. It is a fantastic way to build wealth.
You need to talk to a lender and see what you can qualify for.
You need to talk to a realtor and see what you could sell your house for.
Without those two pieces of information, you are wasting your time. You need to know that this is an option for you in LA before you get ahead of yourself.
If the answers to the two big questions above are favorable (you can qualify for enough, you can sell the townhome for enough for a downpayment), then it certainly may make sense to pursue house hacking.
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Real Estate Agent Colorado (#100092341)
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Hello Kristine,
Congratulations on your growing family! Like Ryan mentioned above. In order to be able to get a more clear picture on your strategy to see what the best option for you is to get pre approved and work with a realtor. Working with a mortgage broker that also invest and helps many real estate investors is important as they will have more knowledge on how to navigate lending guidelines for Real Estate Investing. I see your in the Los Angeles Area and if you would like to meet other like minded people in this space we actually host monthly meetups in Anaheim not too far south from LA. Happy to connect and send you more info. Feel free to send me a DM.
Yes thank you. I am actually in the process of completing my preapproval requirements with my lender. And my agent and I just talked about selling my condo as soon as we have my preapplication approved.
Quote from @Carlos Valencia:
Hello Kristine,
Congratulations on your growing family! Like Ryan mentioned above. In order to be able to get a more clear picture on your strategy to see what the best option for you is to get pre approved and work with a realtor. Working with a mortgage broker that also invest and helps many real estate investors is important as they will have more knowledge on how to navigate lending guidelines for Real Estate Investing. I see your in the Los Angeles Area and if you would like to meet other like minded people in this space we actually host monthly meetups in Anaheim not too far south from LA. Happy to connect and send you more info. Feel free to send me a DM.
Thank you. We’ll see how our sched allows to attend one of your meet ups.
Quote from @Carlos Valencia:Yes thank you. I am actually in the process of completing my preapproval requirements with my lender. And my agent and I just talked about selling my condo as soon as we have my preapplication approved.
Hello Kristine,
Congratulations on your growing family! Like Ryan mentioned above. In order to be able to get a more clear picture on your strategy to see what the best option for you is to get pre approved and work with a realtor. Working with a mortgage broker that also invest and helps many real estate investors is important as they will have more knowledge on how to navigate lending guidelines for Real Estate Investing. I see your in the Los Angeles Area and if you would like to meet other like minded people in this space we actually host monthly meetups in Anaheim not too far south from LA. Happy to connect and send you more info. Feel free to send me a DM.
#3 House Hacking Contributor
- Real Estate Agent
- Los Angeles, CA
Hello Kristine,
I'm a 2x house hacker here in Los Angeles. One of which was a condo, which I have since sold after renting it out for four years and bought multifamily out of state while I'm still house hacking my house with ADU here.
There are a couple of things you need to consider:
1. What would the condo rent for? Can you hold on to it for two years and sell later where the money is still tax free, but your tenants paid down the mortgage, meaning you net more?
2. Where are you looking in LA County? With multifamily, your Realtor needs to be crystal clear as to what is subject to rent control and what isn't and how that effects you. I have clients who are done with LA and I am selling off their portfolio. You can't rent less than 30 days on ADUs or MFU in LA.
3. Could you do an FHA 203(k) which is what I did and build out an ADU? Finding an ADU property in your price range isn't likely. Decent ones are starting at about $1M. You would be responsible for the mortgage for about six months depending on the property. Alternatively, you can do a HELOC on the condo and put that towards the house (which is also what I did).
4. You can do 3.5% FHA as long as your condo wasn't purchased with an FHA loan and you intend on keeping it.
5. Are you okay with selling and buying at the same time? For some, that can be daunting (although totally doable and I wouldn't NOT do it).
Happy to brainstorm as well if you would like.
If you're considering selling your current townhome to use the equity for a downpayment on a larger property with an ADU or multifamily unit, it's important to consider a few things.
First, you'll want to make sure you have a solid understanding of your local real estate market. What are the trends? Are property values rising or falling? What areas are in demand? This will help you make informed decisions about buying and selling.
Second, it's important to get pre-approved for a mortgage so you have a better idea of what you can afford and what your options are. You may also want to consider speaking with a financial advisor to help you create a plan that aligns with your long-term goals.
Third, if you're considering house hacking or short-term rentals, it's important to research local laws and regulations to ensure you're in compliance. You may also want to speak with a local property manager or real estate agent who has experience with these types of investments.
Ultimately, the decision to sell your current townhome and purchase a larger property with an ADU or multifamily unit will depend on a variety of factors, including your financial goals, local market conditions, and personal circumstances. It may be helpful to speak with a local real estate agent who can provide more insight into the market and help you navigate the buying and selling process. Good luck, and hope this helps! :)
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Real Estate Agent
- (818) 688-2062
- http://www.magnoliagroupla.com
- [email protected]
Quote from @Rick Albert:
Hello Kristine,
I'm a 2x house hacker here in Los Angeles. One of which was a condo, which I have since sold after renting it out for four years and bought multifamily out of state while I'm still house hacking my house with ADU here.
There are a couple of things you need to consider:
1. What would the condo rent for? Can you hold on to it for two years and sell later where the money is still tax free, but your tenants paid down the mortgage, meaning you net more?
2. Where are you looking in LA County? With multifamily, your Realtor needs to be crystal clear as to what is subject to rent control and what isn't and how that effects you. I have clients who are done with LA and I am selling off their portfolio. You can't rent less than 30 days on ADUs or MFU in LA.
3. Could you do an FHA 203(k) which is what I did and build out an ADU? Finding an ADU property in your price range isn't likely. Decent ones are starting at about $1M. You would be responsible for the mortgage for about six months depending on the property. Alternatively, you can do a HELOC on the condo and put that towards the house (which is also what I did).
4. You can do 3.5% FHA as long as your condo wasn't purchased with an FHA loan and you intend on keeping it.
5. Are you okay with selling and buying at the same time? For some, that can be daunting (although totally doable and I wouldn't NOT do it).
Happy to brainstorm as well if you would li
Thank you so much for your input. We have so many things to learn from people like you who have the experience because house hacking is a scary idea especially we have kids.
Quote from @Michelle Crochet:
Hi Kristine!If you're considering selling your current townhome to use the equity for a downpayment on a larger property with an ADU or multifamily unit, it's important to consider a few things.
First, you'll want to make sure you have a solid understanding of your local real estate market. What are the trends? Are property values rising or falling? What areas are in demand? This will help you make informed decisions about buying and selling.
Second, it's important to get pre-approved for a mortgage so you have a better idea of what you can afford and what your options are. You may also want to consider speaking with a financial advisor to help you create a plan that aligns with your long-term goals.
Third, if you're considering house hacking or short-term rentals, it's important to research local laws and regulations to ensure you're in compliance. You may also want to speak with a local property manager or real estate agent who has experience with these types of investments.
Ultimately, the decision to sell your current townhome and purchase a larger property with an ADU or multifamily unit will depend on a variety of factors, including your financial goals, local market conditions, and personal circumstances. It may be helpful to speak with a local real estate agent who can provide more insight into the market and help you navigate the buying and selling process. Good luck, and hope this helps! :)
Hi Michelle thank you for your reply. We definitely need to reach out to people who have experience on this. I will continue to research also while we’re waiting for our preapproval.
#3 House Hacking Contributor
- Real Estate Agent
- Los Angeles, CA
Quote from @Kristine O.:
Quote from @Rick Albert:
Hello Kristine,
I'm a 2x house hacker here in Los Angeles. One of which was a condo, which I have since sold after renting it out for four years and bought multifamily out of state while I'm still house hacking my house with ADU here.
There are a couple of things you need to consider:
1. What would the condo rent for? Can you hold on to it for two years and sell later where the money is still tax free, but your tenants paid down the mortgage, meaning you net more?
2. Where are you looking in LA County? With multifamily, your Realtor needs to be crystal clear as to what is subject to rent control and what isn't and how that effects you. I have clients who are done with LA and I am selling off their portfolio. You can't rent less than 30 days on ADUs or MFU in LA.
3. Could you do an FHA 203(k) which is what I did and build out an ADU? Finding an ADU property in your price range isn't likely. Decent ones are starting at about $1M. You would be responsible for the mortgage for about six months depending on the property. Alternatively, you can do a HELOC on the condo and put that towards the house (which is also what I did).
4. You can do 3.5% FHA as long as your condo wasn't purchased with an FHA loan and you intend on keeping it.
5. Are you okay with selling and buying at the same time? For some, that can be daunting (although totally doable and I wouldn't NOT do it).
Happy to brainstorm as well if you would li
Thank you so much for your input. We have so many things to learn from people like you who have the experience because house hacking is a scary idea especially we have kids.
You know that's what I like about house hacking. It doesn't have to be scary.
One way I look at it and I tell my clients is as long as your portion of the bills are close to what you are paying in rent, then you are winning.
I understand the kids concern. I have clients who are/have house hacked with kids. You just need to create privacy and different entry points for the other unit so it feels more like a neighbor than it does someone living on your property.
@Kristine O.Since you bought in 2018 I'm assuming you have some equity... Since rates are higher now than 2018 cash out refi probably doesn't make sense. If you want to keep and rent out your current home - have you looked into getting a HELOC? That way you'll be able to leverage your current home's equity as a down payment on your new house hack. I have a HELOC on the first property I bought in 2016 and have used it to help purchase every other property I have, it's been a great tool for me.
Quote from @Dan Portka:Hi Dan. I thought about heloc but I read that and if i understood it correctly that the risky part is repaying it since it may be fixed interest for 2 yrs and it varies after that and that it’s short term not like repaying it for 30 yrs, So that can be a burden for us.
@Kristine O.Since you bought in 2018 I'm assuming you have some equity... Since rates are higher now than 2018 cash out refi probably doesn't make sense. If you want to keep and rent out your current home - have you looked into getting a HELOC? That way you'll be able to leverage your current home's equity as a down payment on your new house hack. I have a HELOC on the first property I bought in 2016 and have used it to help purchase every other property I have, it's been a great tool for me.
@Kristine O. HELOCs are typically 10 year terms. Some even offer interest only w/ balloon repayment at the end.
Hey @Kristine O. What general area of LA County are you in?
Quote from @Dan Portka:Just looking at the term ‘balloon’ repayment makes me hesitant
@Kristine O. HELOCs are typically 10 year terms. Some even offer interest only w/ balloon repayment at the end.
We are in san fernando valley area
Quote from @Kristine O.:
Quote from @Dan Portka:Just looking at the term ‘balloon’ repayment makes me hesitant
@Kristine O. HELOCs are typically 10 year terms. Some even offer interest only w/ balloon repayment at the end.
I too was weary when I first started investing about balloon repayments until I fully understood. Now I'd prefer interest only w/ balloon. Cash flow will be much better since your HELOC payment is lower. Most people will refinance their main mortgage or sell within 10 years anyways - when you do you can pay off the HELOC.
Quote from @Kristine O.:
Hello pros. Im a new pro member and I need some advice in order to start to be a real estate investor. I bought a 2 bed 2.5 bath townhouse in 2018 when I was still single and now that I have a growing family with my partner and babies we have been watching bigger pockets vlogs and it inspired us to try to live out of our comfort zone. I have a job that is enough to cover our mortgage and basics but we want to try house hacking or even short term rental. The challenges to that right now is that there are limited multi family units in a decent location that ranges from 750-950k. We dont have 5% downpayment. We have not even applied for preapproval yet but we’re just brainstorming. We’re thinking of selling this townhome to use the equity for a downpayment to move into a bigger home with adu or multifamily unit. We are just unsure if now is the right time for that. We are grateful just to get some ideas from the pros especially those pros in the local area.
It sounds like you've done great so far with your financial situation with the great job you've established and your studying of real estate. I agree with @Ryan Thomson, there are a few questions you need to answer in order to help you make the best move. Looking at this strategy, it's not a bad idea at all. We bought our first home in 2019 using conventional financing and sold it in 2020 to buy a 4plex using FHA. It was a great move! We used the equity from that sale to cover the down payment and closing costs. However, I really struggled with that decisions for a bit.
I would work with @Grant Schroeder on this one. He can help go over the numbers and how much you qualify for, etc., to help determine the best strategy for you and your family. You many not need to sell! But he is an investor and lender that I have worked with for a while now and he's the best in the numbers game and finding creative solutions. He can also get you connected to an agent in LA since he's working with agents that close and are investors.
I think selling is a great idea. Having a townhouse as a rental may be more difficult because townhouses tend to have HOA's that can constrict what you can and cannot do and also eat into your cashflow. A local agent that understands your local rental market will be very beneficial. I hope that helps!