Sondern
Don't DM me "How do I start" ima ignore you
- Joined
- May 13, 2022
- Posts
- 3,946
- Reputation
- 3,927
How To Buy A House For Free : A Beginner House Hacking Guide
Made in 8/20/2022 prices and loans may vary
Table of Contents:Made in 8/20/2022 prices and loans may vary
- Intro
- The Basics
- Loans To Take out
- How Find A House Step By Step
- Down Payment Assistance Programs
- Tips
- Conclusion
Intro :
This is a BEGINNERS tutorial, when it comes to house hacking and real estate in general, a lot of things are location dependent. Not to mention there are a variety of different ways to house hack, so for the purpose of this thread I will be teaching you the basics of house hacking.
This is a BEGINNERS tutorial, when it comes to house hacking and real estate in general, a lot of things are location dependent. Not to mention there are a variety of different ways to house hack, so for the purpose of this thread I will be teaching you the basics of house hacking.
The Basics :
What is house hacking?
House hacking at its simplest is the idea of buying a property that you would live in while simultaneously renting out the extra space to generate income.
EX #1 : You can buy a house with the intent of renting it. This would come with a 20-25% down payment. This house has 4 bedrooms and you receive $1700 a month.
EX #2 : You can buy a house with the intent of house hacking it. This would come with a 0-3.5% down payment. This house has 4 bedrooms and you receive 700 a month from each bedroom which gives you a total of $2100 per month as well as a place to live.
(Part 1) Buying a house for you to live in:
The beauty in house hacking is, because YOU are living in the property you can get loans with a low down payment owner occupied loan.
(Part 2) Renting out the extra space :
The beauty in house hacking is, because YOU are living in the property you can get loans with a low down payment owner occupied loan.
Starting prerequisites :
Finding a house
You have alot of options because of the low down payment.
Your options are :
For this thread I will mainly be covering single family houses because I believe they are the most probable for beginners. Although usually the more costly the building such as a triplex or quadplex the more money making potential.
What is house hacking?
House hacking at its simplest is the idea of buying a property that you would live in while simultaneously renting out the extra space to generate income.
EX #1 : You can buy a house with the intent of renting it. This would come with a 20-25% down payment. This house has 4 bedrooms and you receive $1700 a month.
EX #2 : You can buy a house with the intent of house hacking it. This would come with a 0-3.5% down payment. This house has 4 bedrooms and you receive 700 a month from each bedroom which gives you a total of $2100 per month as well as a place to live.
(Part 1) Buying a house for you to live in:
The beauty in house hacking is, because YOU are living in the property you can get loans with a low down payment owner occupied loan.
(Part 2) Renting out the extra space :
The beauty in house hacking is, because YOU are living in the property you can get loans with a low down payment owner occupied loan.
Starting prerequisites :
- Decent credit score
- Four months worth of mortgage payments (Minimum)
- A job / proof of income
- House hacking knowledge
Finding a house
You have alot of options because of the low down payment.
Your options are :
- Single Family House
- Duplex
- Triplex
- Quadplex
- Multipurpose Office
For this thread I will mainly be covering single family houses because I believe they are the most probable for beginners. Although usually the more costly the building such as a triplex or quadplex the more money making potential.
Loans :
These require a decent credit score checkout my other thread on beginner credit cards as well as the basics to getting a good score. These are the main two loans for house hacking
VA Loan
Link : VA Home Loans for Veterans and Military | Veterans United Home Loans
Perks :
Requirements:
FHA Loan
Link : Basic FHA Insured Home Mortgage | GovLoans
Perks :
Requirements:
Other : Ment for first time home buyers
Loan Approval :
You must be pre approved by a lender. A LOCAL BANK / CREDIT UNION IS ALWAYS RECOMMENDED (They help you through the preapproval process for free) They will let you know how much they can loan you based off of income, credit, debt. They can also tell you how probable a loan is if you have parent cosign for you.
These require a decent credit score checkout my other thread on beginner credit cards as well as the basics to getting a good score. These are the main two loans for house hacking
VA Loan
Link : VA Home Loans for Veterans and Military | Veterans United Home Loans
Perks :
- No PMI (Private Mortgage Insurance)
- 0% Down
- Minimum Credit Score of 660
Requirements:
- Must be in the military
FHA Loan
Link : Basic FHA Insured Home Mortgage | GovLoans
Perks :
- 3.5% Down
- Has PMI
- Minimum Credit Score of 500
Requirements:
- Drivers License
- 2 Years Work History
- 2 Years Tax returns
- 2 Years W-2 or 1099
- Requirements vary
Other : Ment for first time home buyers
Loan Approval :
You must be pre approved by a lender. A LOCAL BANK / CREDIT UNION IS ALWAYS RECOMMENDED (They help you through the preapproval process for free) They will let you know how much they can loan you based off of income, credit, debt. They can also tell you how probable a loan is if you have parent cosign for you.
Step By Step :
#1 :
First your going to need to use a site called “redfin.com”
Link : Real Estate, Homes for Sale, MLS Listings, Agents | Redfin
Type in your location, find a location.
#2 :
Load Up your house hacking Calculator
Link
Make A Copy
#3 :
Type in all the details needed, if you scroll down from Redfin information like that monthly taxes and homeowners insurance should be there.
#4 :
Go to Zillow.Com, price my rental
Link : Zillow Rent Estimate Calculator | Zillow Rental Manager
Put in the address and look at the other properties to estimate how much you will receive in rent.
#5 :
Take that income from zillow and make an appropriate price per bedroom. You can also choose to rent the bathrooms as well depending on if you think you will be able to find someone to pay.
EX : A 4 bedroom 2.5 bathroom house rents for $2000 a month. Rent each bedroom for 600-800 per room. (You will be living in one room)
#5 :
Go back to your calculator and type in your expected monthly expenses. Make sure you have some money in vacancy and management just in case a tenant leaves or you need to fix something.
#6 :
At the bottom of the calculator your total will come up. If your monthly cash flow is below 0, figure out if your cost is below an apartment room. If so, your cost is worth it. More often than not you may be getting some additional cash flow, I suggest you keep all profits and put them back into the house if needed.
#7 :
And there you go! You now have a fairly accurate number of how much a house would cost if you were to house hack it.
#1 :
First your going to need to use a site called “redfin.com”
Link : Real Estate, Homes for Sale, MLS Listings, Agents | Redfin
Type in your location, find a location.
#2 :
Load Up your house hacking Calculator
Link
Make A Copy
#3 :
Type in all the details needed, if you scroll down from Redfin information like that monthly taxes and homeowners insurance should be there.
#4 :
Go to Zillow.Com, price my rental
Link : Zillow Rent Estimate Calculator | Zillow Rental Manager
Put in the address and look at the other properties to estimate how much you will receive in rent.
#5 :
Take that income from zillow and make an appropriate price per bedroom. You can also choose to rent the bathrooms as well depending on if you think you will be able to find someone to pay.
EX : A 4 bedroom 2.5 bathroom house rents for $2000 a month. Rent each bedroom for 600-800 per room. (You will be living in one room)
#5 :
Go back to your calculator and type in your expected monthly expenses. Make sure you have some money in vacancy and management just in case a tenant leaves or you need to fix something.
#6 :
At the bottom of the calculator your total will come up. If your monthly cash flow is below 0, figure out if your cost is below an apartment room. If so, your cost is worth it. More often than not you may be getting some additional cash flow, I suggest you keep all profits and put them back into the house if needed.
#7 :
And there you go! You now have a fairly accurate number of how much a house would cost if you were to house hack it.
Down Payment Assistance :
What is downpayment assistance?
Down Payment assistance is exality what the name is. Some entity assists you in paying your down payment, this comes with conditions. YOU HAVE TO PAY IT BACK if you sell the house.
Why would you use down payment assistance?
There is no interest associated and it's basically someone loaning you money when you start. The two best perks is, when you're starting you dont need alot of money and with time due to inflation the money they lend you goes down in value.
Link to assistance programs per state
Link : Down Payment Assistance DPA Programs Complete Guide (hsh.com)
What is downpayment assistance?
Down Payment assistance is exality what the name is. Some entity assists you in paying your down payment, this comes with conditions. YOU HAVE TO PAY IT BACK if you sell the house.
Why would you use down payment assistance?
There is no interest associated and it's basically someone loaning you money when you start. The two best perks is, when you're starting you dont need alot of money and with time due to inflation the money they lend you goes down in value.
Link to assistance programs per state
Link : Down Payment Assistance DPA Programs Complete Guide (hsh.com)
Tips :
What are you willing to sacrifice?
The less room you take up the more money you will receive. What short term sacrifices are you willing to make for long term success?
Rule of thumb #1
In general you will usually qualify for a loan that is 2-2.5 times your income
More income potential.
If you want even more income, buy a RV and keep it parked in the yard or driveway and live out of it
How to find tenants?
People you know and friends of friends are going to be your best bet.
BUT, if you want the most cashflow you can use airbnb, craigslist and other renting apps / websites
What are you willing to sacrifice?
The less room you take up the more money you will receive. What short term sacrifices are you willing to make for long term success?
Rule of thumb #1
In general you will usually qualify for a loan that is 2-2.5 times your income
More income potential.
If you want even more income, buy a RV and keep it parked in the yard or driveway and live out of it
How to find tenants?
People you know and friends of friends are going to be your best bet.
BUT, if you want the most cashflow you can use airbnb, craigslist and other renting apps / websites
Conclusion :
This is simply a beginner tutorial and I suggest if you're interested you look into this a little more. The thing with househacking is, prices will vary depending on location and the real estate market. You can also choose to customize the location and type of house which changes prices. Last you can decide to rent out specific areas like bathrooms and bedrooms or stick with the traditional bedroom only. For these reasons when looking for a house you should learn a little bit more about house hacking. (Disclaimer : Ive never house hacked in my life and everything I say should be taken with a grain of salt. However I do plan on house hacking and ive put a good amount of research into this thread.)
This is simply a beginner tutorial and I suggest if you're interested you look into this a little more. The thing with househacking is, prices will vary depending on location and the real estate market. You can also choose to customize the location and type of house which changes prices. Last you can decide to rent out specific areas like bathrooms and bedrooms or stick with the traditional bedroom only. For these reasons when looking for a house you should learn a little bit more about house hacking. (Disclaimer : Ive never house hacked in my life and everything I say should be taken with a grain of salt. However I do plan on house hacking and ive put a good amount of research into this thread.)
