The Easiest Way to Invest in Real Estate in 2024 (House Hacking)

Episode #950
There’s one way to invest in real estate that’s cheaper, easier, and more efficient than almost any other strategy. It allows you to get the best mortgage rates with the lowest down payments and buy properties in the best areas. And you can do it every single year until you grow a massive real estate portfolio. Real estate millionaires have been made using this strategy, but most Americans have no idea about it. What’s the wealth-building secret that savvy investors are taking advantage of? Of course, it’s house hacking.
If you’ve never heard of house hacking before, the concept is simple: You buy a single-family home or a small multifamily property and rent out the space you’re not using. This not only allows you access to the best mortgages but also keeps your mortgage cost lower than living on your own. This strategy is so good that expert investor Dave Meyer and today’s lender guest, Terrence Terrell, have used it repeatedly to build serious wealth.
If you’re a first-time homebuyer or have a home but want to get into rental property investing, this is THE strategy to try first. Terrence gives a beginner-friendly masterclass on house hacking, showcasing the huge benefits of house hacking’s low-money-down loans, what you need to have to qualify for a mortgage, the common misconceptions most people get wrong about house hacking, and how to use this strategy to build wealth fast.
~~~~
Join BiggerPockets for FREE 👇
www.biggerpockets.com/signup?...
~~~~
Expand Your Investing Knowledge With the BiggerPockets Books:
store.biggerpockets.com/?utm_...
~~~~
Find an Investor-Friendly Agent in Your Area:
biggerpockets.com/agentmatch
~~~~
Find Investor-Friendly Lenders:
biggerpockets.com/findlenders
~~~~
Grab the BiggerPockets Book on House Hacking:
store.biggerpockets.com/produ...
~~~~
Hear Dave on The “On the Market” Podcast:
link.chtbl.com/OTM
~~~~
Watch Dave on the “On The Market” KZbin Channel:
/ @bponthemarket
~~~~
House Hacking 101: What It Is and How to Get Started:
www.biggerpockets.com/real-es...
~~~~
6 Different Ways to Hack Your Housing:
www.biggerpockets.com/blog/6-...
~~~~
Connect with Terrence on BiggerPockets:
www.biggerpockets.com/users/t...
~~~~
Connect with Dave:
BiggerPockets: www.biggerpockets.com/users/d...
Instagram: @thedatadeli or / thedatadeli
Show notes at: link.chtbl.com/BPRE
00:00 Intro
01:26 What is House Hacking?
03:15 Put Just 1% Down!
07:50 Who Should House Hack?
09:04 It's Not as Hard As You Think
11:31 What Homebuyers Need to Know
14:27 Qualifying for a Mortgage
17:58 Advice for First-Time House Hackers

[@grabthemappodcast]

Thank you for sharing such practical advice on house hacking! I found the discussion on leveraging residential financing and preparing for lender conversations extremely helpful.

[@RyanIrwinIAC]

Great message to those who don't think they can get started as an investor.

[@johnnyb33good21]

House hacking is the way to go! I wouldn't have a rental portfolio if it wasn't for owner-occupied financing. I've used FHA 3.5% once on a fourplex, I've used 0% down VA home loan three times on 4plex's , and I'm currently under contract on another 4plex in Mesa Arizona using Fannie Mae conventional 5% down.

[@user-fy4lv6mf5n]

Lenders require a schedule e detailing cash flow expenses profit etc prior to financing. 2 years Usually.

[@johnnyb33good21]

Good point about your write-offs and writing off too much expenses on your taxes. I made that mistake when I was remodeling my apartment units and it made it so where I couldn't qualify for a property. I fixed that the next year by using depreciation because my remodels were Capital improvements which can be depreciated and added back in to your income to help you qualify for a mortgages

[@phil1954]

I have never paid PMI and haven't put 20% down in many years. You guys heard of VA loans?

[@Alessandro1983]

I am 40 years old. Never owned a home. Currently renting an apartment. Want to start my real estate portfolio/investment journey. I am considering house hacking. Just not in California, where I currently live.

[@ldubya]

I was renting an ADU in Manhattan Beach when I started. Purchased a SFR out of state but in an area I was familiar with. It’s been cash flowing since 2018 but I wish I would have known about house hacking back then… 😅

[@johnnyb33good21]

Just don't "consider" house hacking. Take action and take advantage of it FHA 3.5% down, has to pass self sufficiency rule Fannie Mae 5% down, Freddie Mac home possible 5% down but you have to be 80% of area median income VA 0% down USDA 0% down Native American Loan 2.25% Each state has their own first time home buyer loan programs and down payment and closing cost assistance programs

[@sarachristian6310]

Would I be able to build a brand new quadplex townhouse as a first-time home owner in california with no income on the side, and just a little bit of savings to start with?

[@jmaxvil7978]

Does the self sufficiency test applies to multi family units for FHA?

[@TerrenceTerrellChicago]

Yes it does. 75% of the market rental income must cover the whole mortgage payment.

[@johnnyb33good21]

The FHA Self-Sufficiency Test checks if rental income covers the mortgage payment on a multi-unit property. ✅ To pass, the rental income must exceed the monthly principal, interest, taxes and insurance (PITI). 75% of the total market rent (aka pro forma) for all the units has to be more than the total monthly mortgage payment. That total payment includes: principal, interest, taxes, mortgage insurance (PMI) and any other insurance (like homeowners insurance).

[@tsolhamochoi6230]

Awesome insight. We already have a primary with a VA loan, can we use the VA loan again if we rent out our current home? Thank you for making us smarter investors.

[@source-sq5ut]

So I think you would have to refinance on your first VA loan to be able to use it on another property

[@casasdenick]

Refi to free up your entitlement and then rinse and repeat! The VA loan is the best in my opinion. I’m biased as a USMC veteran but it’s a powerful tool!

[@johnnyb33good21]

You need to look up how much remaining entitlement you have. I've used 0% down VA home loan Three times on 4plex's. I've had two VA loans at the same time. For my third purchase of of using VA home loan on a 4plex I had to refinance out of the other VA home loans so I can restore my entitlement You can have more than one VA home loan at a time just depends on your remaining entitlement

[@casasdenick]

To clarify my answer, in my market and those that I mainly work your entitlement is completely used on a single property. It’s great to be able to use it for multiple in cases of lower loan amounts 👍🏽

[@johnnyb33good21]

@@casasdenick yes you're right. It depends on which Market you're in. Higher priced markets might use up all your entitlement on one property

[@jamesjanotta2363]

Where can I find his contact info

[@freddiebutler3653]

In 1988, house it was 8% to 10% for house 🏠

[@williamyougnia3568]

But inflation/cost of living wasn’t this high