All Forum Posts by: Daniel Haberkost

This is very much dependent on your personal financial situation, network, goals and risk tolerance. If both properties really are good deals then I know what I would do (make it work). But I'm in a position where I can do that. Are you in a strong financial position or would you be spending your last dollar and taking a potentially catastrophic risk?

If you did your due diligence properly and the numbers make sense then I would think the biggest risk would be not being able to manage the deals effectively by yourself. Are your private lenders competent investors or do they just have cash? Can you negotiate a situation with one of them where they take on some of the workload? 

Additionally, do you already have reliable contractors who you can put to work immediately? Are your systems/processes in place for a rehab?

@Matthew Novelli Okay so address each item.......

1.) ARV- using the MLS should make this fairly easy, are you looking at houses that don't have good comps? Are you unsure what parameters to use when searching?

2.) Holding costs- are we talking about a flip? A BRRRR?

3.) Rehab- this one always got me when I was first starting too. However, you can find the average costs of various repairs in your market online fairly easily. Then you will need to add a buffer, especially as a newbie. 

It's slim pickings everywhere pretty much but especially in a market like yours/mine. Do you go to local meetups?

Austin has been a very competitive market in recent years. It's very unlikely that you will find anything that makes sense on the MLS. I would connect with wholesalers and look at their deals, conducting your due diligence in real time as if you were actually going to make an offer. You may find that even "wholesale" deals are selling close to market value since inventory is so low right now (I see that happen here all of the time!) but regardless it will be good practice.

When you say you don't know what you're doing, what part of the process are you unsure on? 

@Bridger L Logan sounds like you’re fairly risk averse and will do your due diligence. An extra down payment as reserves will likely suffice assuming you aren’t buying a distressed 4plex.

The other big issue is the tenants of course. Read up on how to screen them, set your standards, document everything and never veer from your processes/standards!

@Bridger L Logan one of the most common mistakes I’ve seen when people start with a house hack is often the entire reason someone starts with this strategy, which is that they have no (very little) money.

Make sure you have a chunk of cash separate from your down payment in case:

1.) You can’t find tenants right away

2.) You inherit bad tenants and have to evict one or multiple.

3.) A boiler immediately breaks and costs you $10k (this is a real example from a friend of mine)

Etc.

Ive been house hacking for years and it’s a phenomenal strategy if you plan/prepare properly. Just don’t over extend yourself financially, screen your tenants hard and don’t let the property fall into disrepair.

@John Mayer I agree with everything you said 100%, so many people told me having three roommates would be terrible (it’s not) and I now have a $1470 mortgage on $2,250 of income while living in the house.

I only wish I had the foresight to buy a house with more bedrooms like you did!

Oh yeah, I have family over there, sounds good, message me anytime!

Exactly, it's not the only way to do it, but it's worked for me. 

Also, didn't notice you're from Cleveland until now, I grew up in York Township right between Litchfield and Medina, just south west of CLE. Much lower barrier to entry there since property is so cheap!

 I house hack a 4/3 single family here in CO and if you put the work in screening your tenants it can be a great arrangement. Always do a background/credit check, call their last two landlords, collect a security deposit, have a formal lease, call their employer to verify income and to get an idea of how they perform at work and be extremely clear in your standards. For example, my tenants know not to make noise past 9:00, to never leave the kitchen a mess and to always pay rent on the first, there was no ambiguity as to my expectations going into the arrangement. 

Also, be mindful of everyone's schedules, everyone in my house comes/goes at different times so it's rare that we run into each other which helps quite a bit. 

Within the next couple months all of my tenants will have been in the house for over a year (with no issues I might add) and 2 of them intend to stay 2 years at the minimum. Point being, it's doable if you have your processes in place. 

Good luck!

-Dan

@Zachariah Hays if you’re doing this with $0 of your own cash and have a lender who is financing all of the purchase/rehab price then you would need to get all of your money out but I don’t actually know anyone personally who has done that (I’m sure some have).

The way we do it we put money down and pay the rehab costs ourselves and you (or a partner) will likely have some cash in any deals you do too. Many people I’ve talked to seem to think it’s a failure if they leave $10k-$15k in the deal. I’m saying that’s not necessarily the true.