House Hack Birthday!
Today marks the 2-year anniversary of house hacking! I purchased a Duplex 08/23/2016 in Dearborn, Michigan so today is the birthday for house hacking (as well as Kobe Bryant 40th Birthday don’t ask why I know that). Many people that bring up house hacking on BiggerPockets podcast talk about how it’s a very easy way to get started without much cash. This post will show you how I was able to do so just getting out of college, knowing nothing about the process, and only being employed for 2 months.
The starting balance on the property was $120,571 that I was able to use a FHA loan with a 3.5% interest rate. I was living at home while saving every penny of my pay check for about 3 months. The lender offered 3.5% down which is $3617 down payment for the home but who knew realtors and bankers need to be compensated as well? I was so worried about the down payment I did not consider the $500 appraisal deposit, realtor fees, lender closing cost, and other expenses.
My realtor was able to negotiate seller concessions which paid his fee and some of the other costs. My first salary job was at a hospital and I earned a $40,000 a year salary. The mortgage banker was able to use what they call "future income" to qualify me as long I can proves 60 days of employment and submit 2 pay stubs. The monthly payment is $1077 with escrow. I rent out the bottom unit for $800 to basketball players from the local college. Which means I am living in this house for under $300 a month!
This is a post for someone who wants to house hack and have no idea how to start. Remember mortgage bankers and realtors are commission based jobs so they want to see you in the house just as much as you do. My realtor and mortgage banker turned into my personal consultant during the process. When I did not consider the realtor fees and other fees they managed to get seller concession and provide lender credits to help with closing cost. I brought a total of about $4000 to the closing table. Albert Einstein said it best, nothing happens until something moves.
Comments (2)
Congrats on your house hack anniversary! I am currently in the process of looking for a multifamily to do the same. It's a bit more expensive in my area but even factoring in the higher costs I still will pay less on a home than where I currently rent!! Good luck on any of your future investments!
Krystal Todd, about 7 years ago
@Krystal Todd Hey!!! I love that your doing the same. Thank you for reading my blog post. It is best of both worlds you save money than renting and its a long term play where in the future you rent it out or sell for higher. So short term you save money and long term make money (renting when you move into another home, selling for higher make profit, or using appreciation to pull money out).
Jamiel Strickland, about 7 years ago