All Forum Posts by: Matthew Brill

 Sounds like you are well on your way. In regards to a house hack, two of the main metrics I look at are will it be cash flow positive after I move out, and will it decrease my net effective housing cost compared to renting while I am living in it. The tenant/pandemic situation will be different market to market, but there are lots of markets/landlords that haven't seen an issue collecting rents. None of my tenants have missed any payments. I did see an extended vacancy in one of my units at the beginning of the pandemic when everything was shut down (March 2020). The way to protect against this is to ensure that you can still pay the entire mortgage even if you have no tenant income, whether that be from reserves or income elsewhere (job, other rentals). Realize that your biggest expenses will be vacancies and tenant turnover.

@Thomas Rodgers

There are multiple different types of properties to go about house hacking. Lots of people house hack with their family living in the same property. If you learn up on it and can give a clear picture to your girlfriend of what it would look like and how it would effect your lifestyle, then you both can better make an informed decision on if it is right for you. But it is definitely a great step towards financial freedom.

@Timothy Harris

You should be able to see my number in the signature below. Or if you go to the website you can schedule some time through my calendar. Looking forward to it!

If you are a contractor full time you will likely already qualify for REP status. You will just have to materially participate in your rental portfolio to be able to offset passive real estate losses from active income. Depending on what your AGI is you may already be able to do it to a degree.

 Jim is spot on here. I apologize if it came across as such but I was not trying to shill or promote myself. I merely am a strong proponent for house hacking for all of the exact reason elegantly stated by Jim K.

And the statement that house hacking is merely "getting roommates" perfectly shows the need for people to better understand the strategy and the granular details that go into successfully leveraging house hacking into building financial freedom.

The less money you have in the deal the better the ROI. But increasing your leverage will also increase your monthly debt service. If you get a smoking deal then I would be less hesitant to be fully levered. But the skinnier it gets (lower debt service coverage ratio) the more I'd be looking to throw in some money to sleep better at night. This also depends on the rest of your portfolio and income. If you can easily cover it from other income sources in a pinch then you're set.

I got 100% LTV on a couple of house hacks. This increased my monthly payments, thus decreasing cash flows, but I have a strong W2 income to compensate if I ever need to. Hope that helps!

You could probably still move into the new duplex as a house hack. You fully intended to live in your current home when you refinanced, but your situation has changed. Also, if you and your fiancee are cosigning a loan on the new duplex, your fiancee can be the one claiming to be the owner occupant. If I'm following your question correctly?

You could also look to get a HELOC on you original duplex. Or get a private money loan (parents, grandparents, future in-laws). If you go the hard money route just make sure you have an exit strategy to get out of it.

In short yes. You can trigger the due on sale clause theoretically. I'm sure it has happened before but it doesn't seem to common, especially if you keep making payments. You would also have to add the insured on your property insurance to include the LLC. If it were me, and I'm not an attorney, I would quit claim deed the property into a revocable trust/land trust (if your state recognizes one), which is acceptable for estate planning purposes and won't trigger the due on sale clause. You can then make the LLC the beneficiary of the trust. But you wouldn't want to do any of this on a house hack.

You make a good point about being able to invest capital elsewhere with money you don't use as a downpayment. I don't know how you calculated your returns in those scenarios but if you put 20% down on a home (4:1 leverage) and the market appreciates 5% per year, that is a return for you of 20% per year. What it doesn't take into account is closing costs when buying and selling. The other thing to consider is monthly costs. You can rent for about $3500 per month. But your mortgage on a $1M home with 20% down will be around $3,370 per month plus taxes and insurance. So you'll likely save more monthly by renting, unless you can house hack which would be your best option if you can find it. There are other variables to consider (house maintenance, potential rent increases) but that's how I would think about it.

You have to have the intent to live in the property for a year to get an owner occupant loan. However, life things happen and it doesn't always work out that way. But if it is your primary residence (state homestead, address on license, get your mail there) and you live there much of the year then you should have no issues.