Is it to much?

Question

Hey Biggerpockets fam, first time homebuyer here I would like some opinions on if buying a house at almost your max buying power is to risky.
My household brings in $6,900 a month (83k a year) we are buying a house at 395k 6.625 interest rate. Piti is $3,150, the house has a adu in the back it’s a 2/1 780sqft fully renovated.
long term rent: 1k-1,200

Mid term: 1,800-2,200 (7 minutes from a major hospital)

We plan on renting it right away, in your opinion should we go long term or mid term? Is it to risky to buy a house at that price at my income with the intention of househacking it?

John Mason · Answer

Devin

You have done the rental comps and checked how long a house stays on market in your area before it rents out right? Like FurnishedFinders, Roomies.com etc to see if it appeals for MTR .

Also you have reserves for a few months in case it does not rent out quickly? Maybe a good idea to connect to a local investor friendly realtor who can give good inputs

Logan Rhea · Answer

Hey @Devin Voelker

House hacking with an ADU can be a great way to ease your mortgage load! Here’s what I’d suggest:

1. Cash Flow: At $3,150 for PITI, your housing cost is about 46% of your income, which is high but can be offset by rental income from the ADU. A mid-term rental near a major hospital could bring in $1,800–$2,200/month, covering a larger part of your mortgage than a long-term rental.

2. Risk: Going mid-term offers higher cash flow potential and flexibility. Just keep 3–6 months of reserves in case of vacancies or unexpected costs.

3. Plan: With the ADU income, your effective housing cost could drop below 30% of your income. This property could be a great first step in building your investment portfolio!

It sounds like a solid opportunity, but just be sure to keep an eye on cash flow and have a backup plan in place. Good luck!

Jake Andronico · Answer

@Devin Voelker

$1,800 x 8 months occupancy = $14,400 annually

$1,200 x 12 months occupancy = $14,400 annually

Are you confident you can get over 8 months occupancy for the midterm?

William Sing · Answer

Hey @Devin Voelker,

Glad to see you're jumping into homeownership with a house hack—such a smart strategy! You've already put in some great thought, and with that ADU, you've got a lot of options.

One thing to consider is starting with long-term tenants in the ADU for a bit and then transitioning it to a mid-term rental (MTR) down the line when you feel more comfortable. A long-term rental gives you a steady, predictable income as you ease into being a landlord. Once you've built up some reserves or feel like you're in a good spot, you could switch gears to MTR, especially since you're so close to a hospital.

And later on, you might even mix it up between MTR and short-term rentals (STR), depending on demand. The flexibility of your location near a major hospital opens up a lot of potential to experiment with different rental strategies to see what works best.

One thing to keep in mind, especially right now, is that we’re heading into the "slower" season for rentals. If you aim too high with your pricing and the place isn’t renting out, be ready to adjust quickly to fill the spot. Having a plan to reduce the price or offer incentives can help get tenants in there faster, which is key to keeping your cash flow steady.

Overall, you’re in a good spot with that ADU, and with a bit of flexibility in your strategy, you’ll have options that can really work for you in both the short and long term. Feel free to reach out if you want to bounce around more ideas!

Best of luck!

Eric DeNardo · Answer

@Devin Voelker,

Like @John Mason asked, check to make sure your comps are solid, maybe even price in the worst case scenario for a rental. and see how that affects the numbers.

MTR typically requires you to furnish the place. If you have extra cash, then do it. It usually pays better and you seem to be in a good location for it. It's worth the risk because with that income, you're mortgage will probably be less than what you would pay for rent.

Is it to much?

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