All Forum Posts by: Benjamin Sulka

Lake, 

Congrats on your early success with the job offer and the savings! 

Since you do plan on building that nest egg, I'd recommend throwing it into a high yield savings account on Wealthfront or into T-Bills through Public.com. Both of these pay like 5-5.5% depending on what you decide to do. 

I don't personally invest in T-Bills but I've heard nothing but good things using Public.com. You can liquidate at any time so when you're ready to purchase, you can pull it out quickly. 

Better than having it make .5% in a traditional savings account when inflation is 3%. 

Best of luck! 

^ Brittany made a great point. Running the numbers and getting a property to cash flow positive is incredibly difficult. Especially when house hacking. 

If you have a solid day W2 day job and are looking to use real estate as a long term wealth building strategy, a property like this may or may not make sense. If your goal is to live off cash flow, then this obviously would not make sense for your goals. 

 Does the $150k purchase price to hit your preferred mortgage expense consider the income that would come in from the rooms/units that you're renting? 

Let's say you buy a duplex with a $150k loan with 3.5% down (FHA) at 7.5% interest is a mortgage expense of little over $1,000 per month. Let's say your total monthly expenses are $1,750 (including taxes, insurance, PMI, vacancy, capex, maintenance, utilities, etc. etc.) If your total expenses are $1,750 and you can rent the other unit for $1,200, then there is only $550 coming out of your pocket each month.

That $550 is what you actually pay. You don't pay the entirety of the mortgage unless your unit is vacant for months on end.

If that $550 monthly payment is less than you would pay renting yourself, it's 100% worth it. 

Let me know your thoughts and if this helps your thought process. 

Levi, 

Congrats on getting involved so young! Sounds like you have a really good grasp on what you're looking to do. 

With your savings and income, why did the lender say you can only qualify for $150k property? Try talking to several different lenders. It's always good to shop around.

Best of luck!!

 Ditto!!

David, 

Congratulations! 

Keep us updated on how things come along with your property. 

-Ben

Madeleine, 

I'm not in your market and I'm not a real estate pro but I'd be happy to connect on LinkedIn! 

I'm looking to house hack my first multifamily this year so we are in the same boat with house hacking. 

https://www.linkedin.com/in/benjamin-sulka-591152191/

Best,

Ben

James, 

Welcome to BiggerPockets! Stick around these House Hacking forums - they're awesome. 

I'm a newbie just like you. Here is the criteria that I'm abiding by when determining what makes a "deal" for house hacking. 

1. Location is of upmost importance. A house hack involves living in the property which means it's somewhere where I (more importantly my future wife) would be willing to live. Better locations tend to have better tenants as well. 

2. Level of comfortability. I don't personally want to do a room by room house hack because I have a girlfriend and a dog so privacy is important. This is why the multifamily route makes more sense for me but it may not for you. 

3. If I bought a house hack, would my monthly payment be the same or less than it would be if I decided to rent instead of buy? 

More on this point. Let's say you could rent an apartment instead of buying and your rent is $1,200/month. Now let's say you buy a $200,000 duplex with 3.5% down (FHA loan for owner occupants) at 7.5% interest.

Your monthly mortgage payment would be $1,349. Now let's consider some other expenses. 

-Taxes

-Home insurance

-Mortgage Insurance 

-Maintenance/Repairs

-Capex

-Vacancy

-Property Management (many include this even if you don't plan on initially offloading to PM)

-Utilities 

Let's say all in expenses are $2,000 per month for easy math purposes. 

If you can rent the other side of your duplex for $1,200, you'd be paying $800 per month out of pocket which is less than you would if you were paying for rent at an apartment yourself. Additionally, you get the tax benefits of owning real estate, equity buildup as you pay down your loan, and you're actively learning how to landlord/manage a rental property. Yes, as a home owner you are on the hook for any other miscellaneous expenses that arise but that's why you take out reserves every month in your calculation. 

I've had the same question and have had countless house hackers describe to me why house hacking is a successful strategy even if you don't make money while you're occupying one of the units. 

Hope this is helpful! 

Shaydon,

Welcome to BiggerPockets and congratulations on completing your first house hack!

I'm getting into mine this year after my current lease is up. 

See you around on the forums! 

-Ben

Jermaine, 

Thanks so much for sharing. This was super valuable for me and really put into the perspective that everyone has different circumstances and lifestyle. What works for a single guy with no wife, kids, or pets is going to be completely different than someone who has any of those. 

House hacking with a significant other emphasizes the location aspect even further. Someone who has their wife living with them would be hard pressed to convince her to live in a C or D location. 

I look forward to part 2! 

-Ben