New to Real Estate · Long Island, NY · Member since 2023 · 3 posts · 6 votes
Hi all!
Looking for some advice on house hacking.
House hacking seems to be the best way for my first investment, but I am a little nervous about the prices in my area. It looks like the low average is around 600-700k (for a split family home). Is it possible to house hack with a price that high?
I could probably find something lower in price than that but it would be in a worse area (i.e. far from train access, not good schools, etc.)
I know out of state is a good option too but as of now I have no team or contacts to help with that, so makes more sense to build up to that point in the near future.
Any advice would be welcome! :)
Also on a side note, I would love to talk to anyone on the phone or via Zoom. I work from home so have ample free time during the day and nights, so would be willing to help work in any capacity for anyone willing to talk :)
Lender · Denver, CO · Member since 2021 · 243 posts · 253 votes
3y
Hey, @Guy Cardinale! House hacking is one of my absolute favorite strategies for getting started - my husband and I got started that way and have had our foot on the gas ever since. I live in Denver and the median closed price last month was around $600k so I feel you when you say you're nervous about starting in a higher price point area. If I were in your shoes, I would try to find a home in my price range with the most beds/baths as possible with as little work needed as possible (basically a unicorn right?!). But, I wouldn't let the price point deter you too much - in this rate environment there are deals to be made and there are strategies you can implement with your agent to get a permanent or temporary lower rate. Get your foot in the door, start building equity, refinance when rates come back down, rent it out, cash flow, on to the next!
Also, I always recommend purchasing a home in a location that YOU want to live in. That way if rates do not come back down and you end up staying there for longer than anticipated, you are somewhere you want to be :) Just my two cents!
Lender · Denver, CO · Member since 2021 · 243 posts · 253 votes
3y
Hey, @Guy Cardinale! House hacking is one of my absolute favorite strategies for getting started - my husband and I got started that way and have had our foot on the gas ever since. I live in Denver and the median closed price last month was around $600k so I feel you when you say you're nervous about starting in a higher price point area. If I were in your shoes, I would try to find a home in my price range with the most beds/baths as possible with as little work needed as possible (basically a unicorn right?!). But, I wouldn't let the price point deter you too much - in this rate environment there are deals to be made and there are strategies you can implement with your agent to get a permanent or temporary lower rate. Get your foot in the door, start building equity, refinance when rates come back down, rent it out, cash flow, on to the next!
Also, I always recommend purchasing a home in a location that YOU want to live in. That way if rates do not come back down and you end up staying there for longer than anticipated, you are somewhere you want to be :) Just my two cents!
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
The more expensive the area the easier and better househacking is. Imagine you want to rent in a cheap area. You can pay $300/mo to live with 3 other people or $500/mo to live solo. You go solo. Now imagine it’s $2,000/mo to live with 3 other people of $5,000/mo to live solo. Which do you choose?
Investor · Worcester, MA · Member since 2020 · 1k+ posts · 1k+ votes
3y
@Guy Cardinale - A good tactic in a high cost area is doing a rent by the room model since you usually can get more per unit than just having one tenant.
Also, when looking for a househack, try to find properties that have hidden square footage that you can convert into more bedrooms or a unit. These are where you truly find value, in the unseen value add potential. Even a basement you can convert to some more bedrooms. Think outside the box.
Usually a househack in a high cost area is always better than renting, it tends to be cheaper than rent and you are building up wealth via tax savings, mortgage paydown, appreciation, and potential cash flow once you leave.
Attorney · New York City / Long Island, NY · Member since 2020 · 597 posts · 248 votes
3y
I don't know what price range would work for you as an individual - but have you considered a coop or condo with a 2nd /3rd bedroom to rent out to a roommate?
There are 35+ for sale in Nassau at the moment with at least 2 bedrooms and priced at $399k and under, in Rocksville Centre, Lynbrook, Hewlett, Glen Cove, Westbury, & other areas
In Suffolk I see 45+ properties in the same category today, including at least 1 foreclosure
It is difficult to outrun the market (I mean by saving money from our paycheck vs real estate equity increasing in a growing market). A lot of people don't give much consideration to apartments, but they can be a great way to get a foothold in the market and house hack until you find something you like in a SFR or multi
I would recommend getting pre-approved for a mortgage as a first step if you haven't already. New York State has several first time homebuyer programs for a below market mortgage rate (& sometimes other assistance). You can buy a coop or multi family with a SONYMA loan as well. If you haven't already you might want to check out their pages:
Not every bank offers SONYMA mortgages, and sometimes an FHA (or VA loan if you have served in the military) is the best choice. If you would like referrals for experienced mortgage bankers/brokers, feel free to message me.
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
2y
House hacking in a high end area is not ideal for buy and hold but could still work. The big thing is will this property make for a good rental once you move on, in other words, will it cash flow? (Now, if you're looking to sell it and make a profit, that's a different story and a high end area is actually the best for that sort of thing.)
One option might be to keep it and rent it out as a STR or MTR. Check your ordinances because city's have been cracking down on AirBNB and the like. But that's an option that can make a more expenseive rental potentially cash flow.
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
2y
If by "work" you mean will it produce net cash flow, it's probably going to be difficult. But the goal of a househack doesn't have to be to end up cash flow positive. Many people house hack simply to offset their living expenses even if it's a partial offset. So, theoretically, it could "work" if that's all you're looking for. If, however, by "work" you mean it will cover the cost of your mortgage, that's probably unlikely. But in order to be able to answer that more accurately, we'd need to know how many beds/baths it has, how many of those rooms you plan to rent out and what rooms rent for in your area.
Have you tried looking into fha loans? You will be required to live on the property for 1 year but down payments are usually 3.5-5%
Honestly in high cost areas its not even worth buying right now. Try buying once the bubble pops (if the bubble does pop). There are signs that we are in a pre-2008 recession housing correction. We will most likely see housing go down significantly next year.
Disclaimer: I am not an expert I am new to the investor crown but this is what Ive seen so far to be true. Take this with a grain of salt =)