All Forum Posts by: Benjamin Sulka

Sidney,

Welcome to BiggerPockets!

As a new investor, I'd highly recommend the house hacking strategy to get started. This will help you get landlording experience while living in the property and get into the property with low money down depending on your area.

If you bought a duplex (3-4 units have other implications like the self-sufficiency test to consider) and lived in one unit, you can put 3.5% down + necessary closing costs and reserves for rehab and other things that may come up. 

It's unlikely that the rent from one unit would cover your entire mortgage given the low down payment and current interest rates but: 

1. You get hands on landlording experience and can deal with issues quickly because you live in the property 

2. You are building equity and putting money down towards an asset instead of throwing money away renting 

3. You can make rehabs on the property while you live there. 

One thing to consider is that a low down payment loan also comes with PMI (private mortgage insurance) which can eat into your cash flow.

I don't know the specifics of your market but this is definitely something to consider! 

Happy House Hacking!

 Carlos, 

It really just depends on who your lender is. Ask them if they have a 5% down conventional program with PMI.

My real estate agent introduced me to a lender who offers this. Utilize your network to get in contact with lenders or use the "Find a Lender" feature on BP under the "Build your Team" option on the top of your screen. 

Best of luck! 

12 months.

There are other ways to get out of this like the other posters mentioned but 12 months is the standard for owner-occupant. 

Happy House Hacking! 

Varun, 

I don't have expertise in what you're seeking but I'm commenting and upvoting so you can get more reach. 

I hope someone qualified responds for you. 

Nick, 

Welcome to BiggerPockets! 

Although I am not personally familiar with the Columbus market, the other commenters are very familiar and I see them active on the forums all the time. I'd highly recommend setting up a chat with one of them to learn more about the market. 

Good luck! 

@Nick Richards,

VA loans offer an excellent opportunity to get into the house hacking game. I would consult a lender on Bigger Pockets that is in your area. Go to the "Build Your Team" section up top and click "Find a Lender". Select Montana and then select Primary Home (House Hack).

Find a lender and explain to them your particular situation. See if the lack of a credit background impacts your options. 

I hope this helps! 

Congrats, Desmond! I hope the rehab process goes exactly how you want it to go. 

It is completely expected in this market for a house hack not to cashflow while you're living there. Most people house hack with a low down payment which further increases the monthly payment. 

Do your analysis on what the numbers will look like once you move out. If that fits your goal and strategy, then it makes perfect sense! 

I love what Ryan said. What's the ROI on paying rent every month?

House hacking is an awesome strategy to pursue and I am pursuing it myself. I am in a similar boat as I just graduated college this past year. I also plan on buying a MFH with an FHA loan. FHA loans do have some requirements like a 580+ credit score, 43% debt-to-income typically and you would be required to get PMI (private mortgage insurance) because of the low down payment. PMI is usually somewhere between 0.5-1.5% of the purchase price per year.

Like Jessie said, buying a 4 unit property would be ideal but it all depends on your tolerance level! As you would be a new landlord, this would be more square footage to take care of and more tenants to vet and manage. 

3-4 unit properties also need to pass the "self-sufficiency test" from a lending perspective. This means that 75% of your monthly rents need to cover PITI (principal, interest, taxes, insurance). Just something else to consider and to do your research on.

Continue to save up your money, nail down the exact criteria you're looking for and network! 

A lot of great stuff from the posts above. 

What I would mention is that although 3-4 units increase your economies of scale a bit, it is more units that you have to take care of and more tenants that you have to place. As a first time house hacker/landlord, this may be too much for you up front. All depends on your tolerance level. Many people have done this! 

Additionally, 3-4 unit properties need to pass the self-sufficiency test which means that 75% of your monthly rents need to cover PITI (principal, interest, taxes, and insurance). Otherwise, a lender won't lend on it.

I'd also recommend having a solid amount of $ stacked up for reserves. For closing costs including inspections, appraisals, and other fees. Also, having some money set aside for rehabs is a good idea. 

From the lenders I have spoken with, a 203k loan requires a rehab quote from 3 different contractors and this entire process can take a long time (up to 6 months I've heard). I've never personally done this strategy but this is what I've learned through my due diligence. 

My advice would be to stay active on the house hacking forums on BiggerPockets. The knowledge you will gain from the people on here is far more valuable than any course you could take. If you have a question, there is almost a 100% chance that someone else on here has had the same question. 

Good luck!