House hacking while in college.
Member since 2024 路 4 posts 路 4 votes
House hacking while in college.
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Drew SygitBusiness Member
Property Manager 路 Royal Oak, MI 路 Member since 2012 路 13k+ posts 路 9k+ votesQuote from @Account Closed:
Hey everyone,
I'm currently in my sophomore year of college and I'm looking to buy a fourplex and live in one of the units while renting out the others. My plan is to get an FHA loan and have my parent cosign on it. I think this would be an easy way to start to build my portfolio at a young age and get some experience under my belt. Ideally I would rinse and repeat this process the year after while I go to school. I'm looking for any advice on the market near Harrisonburg Virginia and if anyone has any advice for me moving forward.
Great idea!
There is a basic challenge with your plan馃槪
You can only have one FHA mortgage at a time and ALL owner-occupied mortgages require minimum 12 months of occupancy before you move out and convert your unit to rental.
So, to free up FHA option for next purchase, you will need to refinance to a conforming mortgage at some point and THEN live in the property for another 12 months.
You could also refi to a non-occupancy mortgage, conforming or DSCR, but you will need 20-25% equity to make that happen.
You could build up the 20-25% by:
1) Buying below market
2) Buying ugly property and using FHA 203(k) to finance improvements, then get the work done (probably better when you're out of school for summer) within the allowed 90 days.
3) Pay down the mortgage balance with accelerated payments
Logical Property Management4.9469 Reviews
14 Replies
- 9moAndrew PostellPro MemberLender 路 Fort Worth, TX 路 Member since 2016 路 8k+ posts 路 6k+ votes
@Account Closed thanks for the post here. I started out my investing career housing hacking a home in college. I started with a $50k SFH since that's all I could do on my own...but even that got me started. Now, advice on the market itself should come from local people in that market.
You should use the "agent" button above in the blue tool bar to find agents that are assigned through Bigger Pockets. Full disclosure, they do pay to be listed there but conceptually, an agent wouldn't want to be listed there unless they were a part of Bigger Pockets and had some familiarity with investing in real estate. I think you should also try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. Some of those facebook groups have thousands of members. The priority is consistent recommendations from active investors. Oh, eventbrite too. You'll need a lender and a property manager as well. Sometimes your property manager can give you some insights on certain neighborhoods.On the same thought, when I buy my primary home it has to fit my PERSONAL needs. Maybe I personally need a good commute time. Maybe I personally need something close to campus. Maybe I want this home because of how safe I feel in the neighborhood. So I'm addressing a primary home with a different perspective. So, even though "this other neighborhood" might get better numbers...if it doesn't fit what you need personally, then it doesn't matter. Lean on your agent and go over your needs and that usually gets us most of the way there.
Hope all of that makes sense. Thanks!
- 9moDrew SygitBusiness MemberProperty Manager 路 Royal Oak, MI 路 Member since 2012 路 13k+ posts 路 9k+ votes
Quote from @Account Closed:
Hey everyone,
I'm currently in my sophomore year of college and I'm looking to buy a fourplex and live in one of the units while renting out the others. My plan is to get an FHA loan and have my parent cosign on it. I think this would be an easy way to start to build my portfolio at a young age and get some experience under my belt. Ideally I would rinse and repeat this process the year after while I go to school. I'm looking for any advice on the market near Harrisonburg Virginia and if anyone has any advice for me moving forward.
Great idea!
There is a basic challenge with your plan馃槪
You can only have one FHA mortgage at a time and ALL owner-occupied mortgages require minimum 12 months of occupancy before you move out and convert your unit to rental.
So, to free up FHA option for next purchase, you will need to refinance to a conforming mortgage at some point and THEN live in the property for another 12 months.
You could also refi to a non-occupancy mortgage, conforming or DSCR, but you will need 20-25% equity to make that happen.
You could build up the 20-25% by:
1) Buying below market
2) Buying ugly property and using FHA 203(k) to finance improvements, then get the work done (probably better when you're out of school for summer) within the allowed 90 days.
3) Pay down the mortgage balance with accelerated paymentsLogical Property Management4.9469 Reviews - Real Estate Agent 路 Temple, TX 路 Member since 2022 路 1k+ posts 路 700 votes9mo
You can also do a low down payment conventional loan though! Even if you do FHA on the first one, conventional loans will typically require only 5% down if your living in the property, there are caveats - from my experience you have to be upgrading if your going to do that method but I really like the Nomad method for investing in real estate, especially getting started!
- Member since 2024 路 4 posts 路 4 votes9mo
Thank you so much, I didn't know that was even an option I'll definitely look into it!
- Real Estate Agent 路 Kansas City 路 Member since 2018 路 4k+ posts 路 3k+ votes9mo
Great idea! I would start having that conversation with your parents now. Cosigning is something they need to be OK with and on board. In the meantime build your credit, savings and income.
This is a great idea and all of the clients who I have helped do this here in my market have all done extremely well. Not only have they had much lower living expenses than they would have had simply renting, but they have all made a lot on appreciation and tax benefits. I got started house-hacking just after college and one regret I have is not starting earlier instead of paying a bunch of rent during college.
Harrisonburg is a nice town IMO (my sister went to JMU all 4 years). I'm guessing that the rental market there consists of mainly college rentals so I would make sure to stay close to campus which works best for your personal purposes living there and attending school anyway, so that's an obvious one. Look for a great local agent to help you who understands the local market, is full time, active in the market and does lots of transactions every year, has deal-flow with off-market leads as well as MLS properties, understands building construction, has vendor connections, knows the rental market there (specifically the student rental game as it is a different animal), and can help you analyze properties. Ideally someone who has student rentals there themselves and can help mentor you. Go for a straight-shooter. Lots of agents have a fancy social media/ online presence, do a lot of marketing and talk a good game but are not great at the fundamentals. Shop around and go with one who has experience which aligns with your goals and who you connect well with.Don't forget the three golden rules of real estate: Location, location, and location. I'd look to buy the ugliest house on the best street you can afford, then fix your house up to the quality of the surrounding properties in order to force appreciation. You can't go wrong with a househack/ live-in flip combo IMO and it doesn't have to be a major flip, it can just be some cosmetic upgrades converting a dated old dumpy property to one that is move-in ready for a retail buyer and "cute". Cute sells.
The one thing I might change about your plan is I might go with a single family with a lot of bedrooms over a quad, simply because single families are easier to perform a value-add with, tend to be in better locations than areas with a lot of MF buildings, appreciate better as a rule, appeal more to renters/ rent for more/ attract a better class of renters, will have a larger buyer-pool of owner-occupant buyers compared to investor buyers when it comes time to sell, etc. I have done much better over time with my single families over my multi-families personally despite the numbers looking better on the MF properties upfront. If you could get a 4 or 5 bedroom house and live for free in it with housemates, perhaps even get a little positive cashflow, and make some improvements to it to add value while you live there, that would be ideal IMO. But all of this is market-dependent so again, get with a local agent who knows their stuff. Good luck!
- Realtor 路 Washington DC 路 Member since 2024 路 19 posts 路 8 votes9mo
Quote from @Account Closed:
Hey everyone,
I'm currently in my sophomore year of college and I'm looking to buy a fourplex and live in one of the units while renting out the others. My plan is to get an FHA loan and have my parent cosign on it. I think this would be an easy way to start to build my portfolio at a young age and get some experience under my belt. Ideally I would rinse and repeat this process the year after while I go to school. I'm looking for any advice on the market near Harrisonburg Virginia and if anyone has any advice for me moving forward.
Hi Warren, it's great to see you starting this early, since fourplex inventory in Harrisonburg is quite rare and competitive, I'd love to learn more about your target budget, how much you have set aside in savings for the down payment, and if you have already firmed up the details with your parents regarding co-signing, so we can see if the numbers align with current market prices. I'm happy to schedule a call to go over the next steps and the specific FHA requirements for multi-family homes to get you started. Feel free to message me.
Marina Sorbie
- Contractor 路 Chicago, IL 路 Member since 2016 路 4k+ posts 路 2k+ votes9mo
Wow @Account Closed! Love that you are looking to buy a 4-unit building while in college - that's amazing! Where are you going to school and what city would the 4 unit be in?
I bought my first property at 26 in Louisville, KY, but wish I would have bought it in College in Ames, IA.Now, I'm pretty focused at renovatioing properties here in Chicago. Happy to connect you with some great FHA lenders like @Jose Valdovinos
Quality Builders4.968 Reviews - Member since 2024 路 4 posts 路 4 votes9mo
Thank you for taking the time to respond, I'll go ahead and take a look into the lenders!
- Lender 路 Greater Chicagoland Area 路 Member since 2024 路 8 posts 路 9 votes9mo
@Jonathan Klemm thank you for the plug! Hello @Account Closed FHA 203(k) can be a powerful way to house hack. Let me know if you want a quick review of your plan.
- Harrisonburg, VA 路 Member since 2016 路 55 posts 路 29 votes9mo
Hey, I've got a few rentals in Harrisonburg. Unfortunately, 4plexes in this city are incredibly rare, as far as on market deals, it's rare to see more than 2-3 a year listed. There are some townhouse communities that are mostly students that may be a solid play, but they may not cash flow, even with roommates. Pheasant Run is great, Devon Lane has some that are individually owned but it's rare for them to come up for sale. Hunter's Ridge/Bradley Drive are available pretty frequently, and they're a great location, but they're starting to get pretty run down and are not fully student occupied at this point. There are SFH around campus for sale occasionally, but beware, unless they are currently occupied by students and grandfathered in, city code won't allow you to put more than 2 unrelated people in them. I don't know that they stalk people to enforce it, but you do NOT want to underwrite a deal planning on 5 roommates then end up with 1.
- 9moAaron ZimmermanBusiness MemberAccountant 路 Chicago, IL 路 Member since 2018 路 2k+ posts 路 1k+ votes
I would just make sure your housing expense is lowered while living there and cash flows upon moving out. Otherwise, probably not a good investment. Love the approach though and getting after it in College!
Brick House CPAs53 Reviews - 7moRyan SpathBusiness MemberReal Estate Agent 路 Boise, ID 路 Member since 2017 路 583 posts 路 379 votes
Quote from @Account Closed:
Hey everyone,
I'm currently in my sophomore year of college and I'm looking to buy a fourplex and live in one of the units while renting out the others. My plan is to get an FHA loan and have my parent cosign on it. I think this would be an easy way to start to build my portfolio at a young age and get some experience under my belt. Ideally I would rinse and repeat this process the year after while I go to school. I'm looking for any advice on the market near Harrisonburg Virginia and if anyone has any advice for me moving forward.
This is amazing! Yes 100% do this. A couple things. You can only have one FHA loan, so for the next loan you would likely be able to do a conventional 5%. Find a Realtor in your area that is investor friendly. You can find them here on BP or even better start going to local meet ups, tell people what you want to do and listen.
To go back in time this is 100% what I would do. When I was in college, we rented a house and with the landlords permission converted a 3br to a 4br to save on rent, we had guys sleeping on the couch sometimes to save money too haha!
This is the time when you can be comfortable being uncomfortable! If you want me to send you the excel sheet I use to help analyzing deals send me a dm with your email glad to help!
- 7moMike PaolucciBusiness MemberRealtor 路 Columbus Cleveland Dayton, OH 路 Member since 2022 路 504 posts 路 556 votes
Quote from @Account Closed:
Hey everyone,
I'm currently in my sophomore year of college and I'm looking to buy a fourplex and live in one of the units while renting out the others. My plan is to get an FHA loan and have my parent cosign on it. I think this would be an easy way to start to build my portfolio at a young age and get some experience under my belt. Ideally I would rinse and repeat this process the year after while I go to school. I'm looking for any advice on the market near Harrisonburg Virginia and if anyone has any advice for me moving forward.
I'd recommend looking into a 5% down conventional loan since your parents will be co-signing. Once you hit 20% equity, your PMI will drop off where as with an FHA, it'll stay with you for the life of the loan.
If that's feasible for you and your parents, go that route. Less stringent requirements for the property itself and gives you more flexiblity overall.
Reafco - Mike Paolucci 512 Reviews
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