All Forum Posts by: Chace Fraser

@Noah Stout Having a "non-occupant co-borrower" is a great way to qualify for financing. I work with a lot of college students who are looking to house hack and have no way of qualifying because they don't have any income. What they need is an "investor" (often times parent(s)) to help them qualify. Also, I just confirmed with my lender (who has helped MANY house hackers) that you can do 3.5 percent down on FHA with a non-occupant co-borrower.

The easiest, fastest, and best way to get answers to your questions will be to sit down with a lender (or 2 or 3). They're not scary, I promise. They're there to help you. Write your questions down and ask ALL OF THEM! Asking all of these questions will also help you determine if they know what they're doing when it comes to working with house hackers. Believe it or not, they want to help you and lend you money. They're looking for ways to lend you money, not excuses not to lend you money. If they are able to get you to qualify for a loan, and you use them as a lender, they get paid. They want to give you money.

Hi @Nate Ramos as you probably know, for the most part, you can only have one FHA mortgage in your name at one time. There are exceptions that are few and far between (like if you were moved to another area by your work), but for the most part, it's only possible to have one at a time. If two people are on the same FHA loan, then this counts as their one FHA loan.

One strategy is to leapfrog who is on the loan/purchasing the property and on title (only having one person, not both, on the mortgage and title of a single property). How this would work is one person would buy the first property with their FHA loan, and then when you're ready to purchase the second property, the other person could purchase it with their FHA loan. Yes, this does present the challenge of both individuals needing to be able to qualify for a loan on their own, but it's a great way to do it. Then, when it's time to purchase the third property, you could refi out of the first FHA loan (if you have enough equity), and then use your FHA loan again, or use a conventional loan product.

This strategy is not without its challenges. One person must be able to qualify for a loan on their own. It works well in Oregon because we’re a personal property, not community property, state. This means that when one of us goes to get an individual loan, the bank will not look at the other person's debts/liabilities.

My wife and I are leapfrogging but doing it slightly different than explained above. Our first purchase was a duplex and we used a 5 percent down conventional loan (again, only one person on the mortgage/title). The next property will be that same conventional product (if possible) purchased by the other, and then the following properties will be purchased with an FHA loan. Using the conventional product first does a couple of things for us:

• We won't have to refi out of the FHA loan to eliminate PMI
• Once we reach 20 percent equity PMI will go away
• We still have our FHA loans available to use

Having a "non-occupant co-borrower" is a great way to qualify for financing. I work with a lot of college students who are looking to house hack and have no way of qualifying because they don't have any income. What they need is an "investor" (often times parent(s)) to help them qualify.

Game Planning for multiple house hacks can get a little tricky… which is why it’s imperative to work with professionals who know what they’re doing!

Good luck on your journey and feel free to reach out if you have any questions!

Hey @Kevin Figueroa, when I’m analyzing the numbers on a house hack I go through this progression. Keep in mind I’m in a high cost of living area so some of this may not be relevant to you. These “hurdles” typically go from easy to clear to harder and harder to clear. Better “deals” will clear more of the hurdles.

1. I first start by running the 1 percent rule calculation on all properties that are available (gross monthly rent divided by purchase price). I run the calculation a couple of times. First, I use current rents, and then market rents. If a unit is vacant I’ll use what market rent would be for that unit. This gives me a baseline for my market so I’ll know a good deal when it comes around. In my market 0.55 is a good output. If it's around 0.55 percent or higher I'll then go into the next scenarios.
2. The buyers housing cost must be lower than it was before… or at least under market rent. What if you were living with your parents rent free? What if you were living with a friend and they were charging you way under market rent?
3. Will the buyers portion of the mortgage payment be LOWER than the market rent for the unit they plan on living in? If you are renting a 2/1 and the market rent for that type of rental in the area is $1,000, then the amount of the mortgage payment you will be responsible for must be lower than $1,000. Otherwise, why would you pay more to live there? Remember, the goal of house hacking is to reduce your housing costs
4. The property must be cash flow neutral or cash flow positive at the current rents if you were to never move in. If a unit is vacant I use current market rent.

This is where I start. If a property clears these hurdles, I’ll then start to dig a little deeper.

If you're looking for "what line items should I use" when calculating expenses, just go to the BP calculator and see what they ask for.

@Abraham Alemnew Welcome to the BP community. Just by joining you are taking the first step to financial freedom. @Joshua Janus made 3 awesome points!

First off, you will need to decide on your ultimate goal for investing in real estate (house hacking VS out of state investing) and then determine how you want to get involved/start. Do you want to be an agent, a buy and hold investor, flipper, wholesaler, etc... You need to figure out a plan on how you plan to attack one or more of those target areas. Next is just sitting down and following that plan to the best of your ability until you have reached your goal.

It's ok if your ultimate goal/plan changes, and it should really. As you experience, grow, and learn more, you'll have a better understanding of how things work and what ventures may be best suited for your personality and lifestyle preferences. However, try to keep on blinders when it comes to shiny object syndrome. Pick one strategy and start with that. After you’ve done a few deals of that type of strategy you can move on.

I would recommend listening to the BP Money Podcast and figure out ways to make more money, spend less, so that in 12-24 months, you can start investing yourself. You can also go to local events and start meeting people who are doing what you want to do.

Getting your mindset right, setting goals, and creating a strategy are essential first steps to investing in real estate. It's also crucial to surround yourself with the right people.

There are many people that you will need to surround yourself with. To ensure success you will definitely want to associate with like-minded people, people with experience and who are already doing what it is you want to do, and people who inspire you… not naysayers, negative people, nor critics. BP is a great place to find these people, both virtually and in real life. You can find local meetups in your area by going to Network>Events up in the menu bar. I’ve found that people on BP are incredibly friendly and willing to help.

Best of luck!

@Marcus Tribble welcome to the BP community. Just by joining you are taking the first step to financial freedom. I think house hacking is a great way to get your feet wet in rental investing, especially if you can find a duplex or so and live in one half and rent out the other half. There is tons of information on the forums and various professionals on this site.

When I’m analyzing the numbers on a house hack I go through this progression. Keep in mind I’m in a high cost of living area so some of this may not be relevant to you. These “hurdles” typically go from easy to clear to harder and harder to clear. Better “deals” will clear more of the hurdles.

1. I first start by running the 1 percent rule calculation on all properties that are available (gross monthly rent divided by purchase price). I run the calculation a couple of times. First, I use current rents, and then market rents. If a unit is vacant I’ll use what market rent would be for that unit. This gives me a baseline for my market so I’ll know a good deal when it comes around. In my market 0.55 is a good output. If it's around 0.55 percent or higher I'll then go into the next scenarios.
2. The buyers housing cost must be lower than it was before… or at least under market rent. What if you were living with your parents rent free? What if you were living with a friend and they were charging you way under market rent?
3. Will the buyers portion of the mortgage payment be LOWER than the market rent for the unit they plan on living in? If you are renting a 2/1 and the market rent for that type of rental in the area is $1,000, then the amount of the mortgage payment you will be responsible for must be lower than $1,000. Otherwise, why would you pay more to live there? Remember, the goal of house hacking is to reduce your housing costs
4. The property must be cash flow neutral or cash flow positive at the current rents if you were to never move in. If a unit is vacant I use current market rent.

This is where I start. If a property clears these hurdles, I’ll then start to dig a little deeper.

If you're looking for "what line items should I use" when calculating expenses, just go to the BP calculator and see what they ask for.

Good luck!!!

Hey @Christian Barto welcome to the BP community. Just by joining you are taking the first step to financial freedom. I think house hacking is a great way to get your feet wet in rental investing

There are TONS of things to keep in mind when considering micro location characteristics when purchasing a house or an investment property. Here’s a general list:

• Is it on a busy (double yellow line) street? Generally speaking properties on a busy street don’t rent as fast or for as much, and they don’t sell as fast nor for as much. Would you want your family to live on a busy street with the threat of getting hit by a car? This crosses a lot of peoples mind who have kids and/or pets. It doesn’t mean these are a bad investment, but do keep it in mind.
• How are the local schools? Good schools equals more demand and higher rents. If someone has a kid in a particular school they’re not going to want to move out of that school district. Houses in good school districts could lead to lower vacancy rates. Good schools also means higher prices yet higher appreciation.
• Crime rate. I hope this is self explanatory
• Proximity to transportation (major roads, train stations, bus stops, etc). But too close (like a freeway or train tracks are in the backyard) can be detrimental.
• Noise. Is it quiet? Is there road noise? Do planes land over head? People will still buy in these places, and they tend to get used to it… just something to keep in mind.
• Proximity to major employers or your work. Hospitals, schools, colleges, corporate offices, airports, malls, etc.
• Local laws (rent control): Some municipalities are more landlord friendly and some are more tenant friendly.
• Neighborhood feel / Pride of ownership. Remember, the people in the area represent the types of renters you will attract. One of our personal criteria is “would we feel safe walking around here at night?”

Your budget should be enough for the down payment, inspections, closing costs, reserves, rehab (even if it’s going to be years in the future), enough to cover costs when you don't have a tenant (potentially for MONTHS), etc. If you’re looking for an easy answer it’s difficult to give an exact one, but here are some ideas for how much you’ll need (you’ll need to do more research because it’s different in all areas):

Downpayment: 3.5 percent of purchase price (if you're using an FHA Loan)

Inspections: $1,000

Closing Costs: In my market they typically come out to 1.5 to 2 percent of the purchase price

Reserves: 3-6 months or more of mortgage payments (remember when COVID hit and people to pay rent? Yeah, the more the merrier… we did 8 months and we were happy we did).

Rehab/CapEx: This was calculated into the reserves for us. We also knew the roof needed to be replaced within 5 years of purchasing

Best of luck and let us know how it goes! Feel free to reach out if you have any questions.

@Dorian Moran welcome to the BP community. Just by joining you are taking the first step to financial freedom.

First off, you will need to decide on your ultimate goal for investing in real estate and then determine how you want to get involved/start. You didn't mention that in your question so nobody can really answer it for you. Do you want to be an agent, a buy and hold investor, flipper, wholesaler, etc... You need to figure out a plan on how you plan to attack one or more of those target areas. Next is just sitting down and following that plan to the best of your ability until you have reached your goal.

It's ok if your ultimate goal/plan changes, and it should really. As you experience, grow, and learn more, you'll have a better understanding of how things work and what ventures may be best suited for your personality and lifestyle preferences. However, try to keep on blinders when it comes to shiny object syndrome. Pick one strategy and start with that. After you’ve done a few deals of that type of strategy you can move on.

I think house hacking is a great way to get your feet wet in rental investing, especially if you can find a duplex or so and live in one half and rent out the other half. There is tons of information on the forums and various professionals on this site.

If you're interested in buy and hold, or house hacking, deciding on whether you want to purchase a SFR or multi-family property really depends on your goals, how you want to live, the amount of work you want to put in, and your exit strategy for the property. There are a ton of pros and cons to SFR and MFR house hacking. Here are just a couple to keep in mind:

SFR Pros

• Wonderful opportunity to live for free, or be paid to live, if you rent out rooms
• Typically less expensive
• If you want to transition to living in a single family home without roommates, you already own the home and you don’t have to move.
• Typically, SFR's are easier to sell and appreciate faster (but not always!)

SFR Cons

• Shared space with your tenants/roommates
• Occupancy limits: each town and county has different occupancy limits. In some municipalities, you're only allowed to have 3 unrelated people living together. For example, in Denver you can only have 3 unrelated people living together under one roof. While this rule is hardly enforced at the moment, you just need to be aware of the added risk you are taking and have a plan in the event this rule does become enforced.
• Could be more difficult to cash flow as an investment property once you move out (if not renting out by the room)
• More affected by a vacancy (if not rented out by the room)
• More labor-intensive if you rent out by the room.
• Not able to apply rental income to increase buying power

MFR Pros

• Privacy/separation from your tenants
• Still have the ability to rent out rooms in your unit for extra income
• Less affected by vacancies
• Ability to apply rental income to your income thus allowing you to increase your purchasing power
• Ability to scale faster

MFR Cons

• More expensive
• Can be difficult to live rent-free in high cost of living markets
• Can be more difficult to sell (but not always and/or if priced correctly)
• Lending rules change when purchasing 3+ units

Best of luck and I look forward to hearing how it goes!

@Mickael Castillo

Welcome to BP and best of luck in your real estate investing!

A great place to start is https://www.biggerpockets.com/forums/521-events-and-happenings which you can use to find like-minded people in your area.

You'll find some helpful tips at https://www.biggerpockets.com/starthere.

For tips on how to get the most out of BiggerPockets, check out: https://www.biggerpockets.com/rei/biggerpockets-com-tutorial/ This can get you acclimated to Bigger pockets.

The BiggerPockets Keyword Alert System is an awesome tool: https://www.biggerpockets.com/... 

House hacking is an incredible way to get into buy and hold real estate investing with a relatively low financial barrier to entry… plus the added benefit of reducing housing costs!

Getting your mindset right, setting goals, and creating a strategy are essential first steps to investing in real estate. It's also crucial to surround yourself with the right people.

There are many people that you will need to surround yourself with. To ensure success you will definitely want to associate with like-minded people, people with experience and who are already doing what it is you want to do, and people who inspire you… not naysayers, negative people, nor critics. BP is a great place to find these people, both virtually and in real life. You can find local meetups in your area by going to Network>Events up in the menu bar. I’ve found that people on BP are incredibly friendly and willing to help.

Best of luck.

@Julio Ibarra @Michael Dumler's advice is excellent. 

Having a "non-occupant co-borrower" is a great way to qualify for financing. I work with a lot of college students who are looking to house hack and have no way of qualifying because they don't have any income. What they need is an "investor" (often times parent(s)) to help them qualify.

When I was working in corporate America I was in the same situation as you. I wrote a business plan and presented it to my "investors". It laid out my strategy (which was to house hack) and all the benefits of it. Because I was serious enough to take the time to write out a business plan I found investors willing to co-sign on the loan. Unfortunately, the company I was with downsized, I was a cog in the corporate wheel and lost my job, and it didn't work out back then to purchase.

Fast-forward to now, what I've done is turned that business plan into a template that I give out to clients who are looking to house hack but have no way of qualifying on their own. They just fill in their info where applicable and can send it out.

If you (or anyone reading this, agents included) want a copy of this business plan just send me a DM or email (email address is in my signature below) and I am more than happy to share it with you.

Good luck on your journey and feel free to reach out if you have any questions!

@James L. Demaniow welcome to the BP community. Just by joining you are taking the first step to financial freedom.

House hacking is an incredible way to get into buy and hold real estate investing with a relatively low financial barrier to entry… plus the added benefit of reducing housing costs!

Getting your mindset right, setting goals, and creating a strategy are essential first steps to investing in real estate. It's also crucial to surround yourself with the right people.

Your budget should be enough for the down payment, inspections, closing costs, reserves, rehab (even if it’s going to be years in the future), enough to cover costs when you don't have a tenant (potentially for MONTHS), etc. If you’re looking for an easy answer it’s difficult to give an exact one. He are some ideas for how much you’ll need (but you’ll need to do more research because it’s different in all areas):

Downpayment: 3.5 percent of purchase price (if you're using an FHA Loan)

Inspections: $1,000

Closing Costs: In my market they typically come out to 1.5 to 2 percent of the purchase price

Reserves: 3-6 months or more of mortgage payments (remember when COVID hit and people didn't have to pay rent? Yeah, the more the merrier… we did 8 months and we were happy we did).

Rehab/CapEx: This was calculated into the reserves for us. We also knew the roof needed to be replaced within 5 years of purchasing

Best of luck and I look forward to hearing how it goes!