House Hack while in College

[Isaac Wang]

Hi all,

I'm a college student at USC looking to do my first house hack in the LA area within the next 3-6 months (one semester). I have 30k saved from inconsistent income, and will potentially be able to cosign with parents who have a strong credit score (+800) and can help with the down payment. Properties in the LA area with promising cash flow seem to be predominantly over $800k, so I am planning to use an FHA 3.5% loan to either purchase a large single-family and set it up as a coliving space with other college students, or a 3/4 unit multifamily property that passes the sustainability test.

I understand that neither of these options is easy, so I hope the BP community can guide me as I begin my real estate journey. In particular:

1) Am I underestimating the amount of time the buying process will take, or overestimating my current ability to make a deal?

2) Would you recommend finding a loan officer or agent, and if so, any recommendations? 

3) Is buying a property in a rough neighborhood/with existing tenants something I should avoid? 

I appreciate any feedback about my current plans, and I look forward to connecting with all of you!

[Patrick Roberts]

You need to make sure your parents can provide the needed income for this deal. Boarder income is very difficult to use in general and nearly impossible to use in qualifying, so your parents will need the income to support whatever purchase amount youre looking at. If you buy a multifamily, then the income from the rented units can be used to help with qualifying. Either way, buying a quality house in a decent neighborhood to househack is a fairly safe and conservative move.

As far as whether to buy in a rough neighborhood, this is a question of strategy and goals. I personally would not because that doesnt align with my philosophy and strategy. Another thing to consider is that you'll be living there. Rough neighborhoods are called rough neighborhoods for a reason. Do you really want to deal with all that while youre trying to study and focus on school? 

I personally prefer conventional to FHA, also. Better bang for the buck and the guidelines are more friendly to scenarios like this. FHA also has a self-sufficieny test for 3 and 4 unit properties.