House Hacking On Steroids!
CLOSING 300 TRANSACTIONS PER YEAR – FOR INVESTORS
We work with an agent who plans to close 300 transactions in 2023 – focusing exclusively on investors.
He is extraordinarily focused and disciplined (former D1 athlete on his way to the pros before getting injured) and he has yet to miss a goal – so we have no doubt he and his team will hit next year’s goal.
20% OF DEALS ARE HOUSE HACKING!
One of the most interesting aspects of his business though is the percentage of his deals that involve “house hacking.”
House hacking, as most readers know, is the process of buying a home as an “owner-occupant” but then using rental income from the property to help pay off the mortgage.
The advantage of house hacking is the ability to take advantage of owner-occupied financing (with much lower rates and FAR LOWER down payments) while also using the potential rental income to help qualify.
SINGLE-FAMILY RESIDENCE (SFR) HOUSE HACKING
Buyers can house hack SFRs – by renting out rooms inside the home or by renting out an accessory dwelling unit.
But – the drawback to this is that the potential rental income often cannot be used to help qualify.
2 TO 4 UNIT HOUSE HACKING
This is the most common approach to house hacking, and it works beautifully because lenders can use either the market rent or actual rent (if the unit is occupied) from the non-owner units to help borrowers qualify.
In addition, buyers get to be on-site property managers and they can use the rent to pay off their mortgages much faster than they ever could if they just bought an SFR that generated no income.
And – “owner occupant” buyers are only obligated to live in the property for one year – so they can buy a new “owner occupied” 2 to 4 unit property every year (in other words, they can “house hack” every year).
FHA vs. FANNIE MAE/FREDDIE MAC
FHA is the best deal going for house hackers, as it allows buyers to put down as little as 3.5% for two, three or four unit properties!
Fannie Mae, however, is more restrictive, requiring far larger down payments for units (15% for two units; 25% for three and four units) – with the exception of “Home Possible.”
Home Possible is a special program for first-time buyers that allows them to buy two unit properties with as little as 5% down – BUT there are income limits (so not everyone will qualify).
In conclusion – this is all just classic “house hacking” and it is not really “ON STEROIDS,” BUT – the steroid thing made for a good headline. 😊
More importantly, it is all just a great reminder for every new buyer to consider the benefits of house hacking.
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167