House Hacking: Lets You Get Your Housing For Free

This Hack lets you get your housing for free by having someone else pay for it, house hacking. investment, property, rental, rent, life, hacks, invest, fixer, upper, income, property http://jessicacoaches.com/2017/05/house-hacking/ ‎
This Hack lets you get your housing for free by having someone else pay for it, house hacking. investment, property, rental, rent, life, hacks, invest, fixer, upper, income, property http://jessicacoaches.com/2017/05/house-hacking/ ‎
This Hack lets you get your housing for free by having someone else pay for it, house hacking. investment, property, rental, rent, life, hacks, invest, fixer, upper, income, property http://jessicacoaches.com/2017/05/house-hacking/ ‎

No, this is not about marrying rich! This is a real solution to make living expenses more manageable, or even make money. And while this is not about getting a sweet sugar mama or daddy to pay your rent, it is having someone else pay for it.

Your renter.

What I’m talking about is commonly referred to as House Hacking. House hacking is when you buy a property with the intention of renting out units or rooms to people to pay for the property. The HGTV show Income Property often makes a reference to this when people are making a rental unit in their basements and such.

 

If you are in need of more immediate housing solutions, I would like to point you to https://portal.hud.gov/hudportal/HUD?src=/topics/rental_assistance

 

I have been house hacking for the last six years. What we do is purchase a home, we have a family, so we aim for multi-unit homes. We keep the property prices low as we don’t have a huge income and have lots of skills by buying fixer uppers, usually living in the unit we are fixing up. Right now we are living in a duplex, in the larger of the two units: a three bedroom two bathroom. The other unit is a two bedroom 1.5 which is completely separate is paying the entire mortgage. Pretty sweet right?

Related: How I never have to pay another penny for my retirement at age 34 on a 30,000 per year salary!

It gets better, once everything is fixed up we find a new property and do it all again, renting out the other property fully.

Examples of house Hacking situations:

–  Buy a 3 unit property, live in 1 and rent the other two out.
–  Get a large single family home with four bedrooms, you live in one bedroom and rent the others out.
–  Purchase a house with a guest house or basement that will function as a rental to help cut costs on your large residence.

Pros:

 

House Hacking allows for low-income investors to squeak into the investment property world. This is because the rental property will qualify for owner occupied loans with down payments of 3.5%-5% as long as it is four units or under.

Related: How to Buy a Property With No or Low Money Down!

It can lower your expenses, allowing you to save more money to invest in yourself. I do love it when other people pay my mortgage!

You are close to your tenants, so they tend to behave better, it is also convenient being your property manager allowing for more profits.

If you buy a fixer, you can live in a unit that needs to be fixed up and slowly do the renovations. No driving to the site. No lapse in rent during a renovation. Improve slowly, or by the room, as you have the money to do it, the only one who has to suffer a construction zone is you.

house hacking construction zone

Cons:

You will be living next to your tenants. For some, this can be awkward.

You may be giving up the privacy that having a whole lot between you and your adjoining neighbor provides.

Have you ever lived in a construction zone? While amazingly rewarding, there is nothing like building something to make you feel accomplished. It is stressful. There is always something to do.  In fact, that half done project might be right in front of you while you are trying to get some relaxation in. It also always tends to take longer than you expect!

 

Advice for first-time house hackers:

If you are going to get a fixer upper, and do the work yourself, try not to be too ambitious, stick to surface problems and properties that do not need to be gutted.

Get rid of your mortgage insurance by forcing appreciation with improvements. You can do this once you feel you have 20% equity. You can either refinance or try to get a reevaluation from your current lender, and they will likely want an appraisal.

Just because you are living in the home does not mean the numbers do not matter! Plan for possibly turning it into an investment property in its entirety. You still want a cash flowing property. When evaluating net income just use a fair market rent for the unit you will be living in.

 

Do you Have any experiences house hacking?  Would you recommend it?  Planning on trying it?

9 Real Estate Disasters!

9 Real Estate Disasters You Will have to see to believe, home, buying, tarmls, houses, gross, fire, fixer uppers, outdated. http://jessicacoaches.com/2017/04/9-real-estate-disasters/

What you are about to see is pictures of actual old listings of Real Estate that sold.  We have decided to throw a little honest advertising spin on it. Enjoy!


Previous Owner was an artist!  One of a kind murals adorn the walls of this gem.


Character! This home is a little bit of France at your fingertips!


 

This deal is on fire! Owners had to leave without notice, their loss is your gain!


Quaint no more! This home has a brand new addition.


Pride of ownership! Owner put some unique touches on this home.


Lagoon-like Pool! You’ll feel like you are in the jungle when you swim in this delight!


This home is a diamond in the rough, polish it till it shines!


Move in Ready! This home has everything and more that you need to make this house a home!


Vintage Charm! This home will transport you to a different time.

 

Do you like fixer-uppers?  Huge Renovations?

Related: 4 Ways Real Estate Investing Could be Making You Money Right Now!

Smart Homes: Cutting Edge or Passing Fad?

Smart Homes: Cutting Edge or Passing Fad Amazon Echo Alexa Google Home Smart Devices http://jessicacoaches.com/2017/03/smart-homes-cutting-edge-or-passing-fad

I am a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.


 

First, what is a smart home? It is technology that has been integrated into your home, some of it has to be hardwired into your home while others are devices that communicate via Wi-fi. You now have the potential to control an enumerable amount of devices through movement or sounds, I have even seen some that use vibrations.

Set up your own security system? Check.
Have your entire house change mood lighting with a single phrase. Yep.
Keep an eye on an elderly family member. That too.
A personal assistant who plays music and will help you with your cooking by reading recipes or setting timers all without having to wash those chickeny hands! Yeah, even that.
Save you money by reducing your energy bill. That one is easy!
Control your home remotely? Piece of cake!

Technology has filtered its way into all aspects of our lives, and I imagine that slowly smart technology in homes will become standard. I have noticed as a Realtor, that when I encounter smart technology on a house, the buyers more often than not are excited, and it is one of the things they recall about the house after.

So where do you start?

For me, I just started my journey into changing our house into a smart home last year. Being a mom of three boys, I NEVER buy anything for myself. So when my husband asked me what I wanted for Christmas this year, I felt like a splurge. After watching countless Youtube videos and articles, I told my husband that I wanted a Samsung SmartThings Home Monitoring Kit, and an Amazon Echo. I chose the SmartThings Starter Kit because I like all the things you can do with security, cameras, alert you if a window is open. (Good for burglars and wayward children!) The company is also large and more prominent in the Smart Home field which while slightly more costly, is better supported than some of the smaller companies. The Echo, I chose because it seemed better established than the Google Home, who just entered the scene in 2015 and has some catching up to do program wise. The Echo has had a large impact in my life; music is so much more often playing in my home now, which means more dancing and lifted spirits.

Now, if you are more interested in lighting, I would suggest a Philips White and Color Ambiance Starter Kit to start instead.

How does it work?

First, you must get a hub, this device receives and delivers transmissions to all your other devices and allows for their control. A few of the devices such as the Nest Learning Thermostat  and the personal assistant devices, while able to integrate with the hub can operate independently if you wish.

You can control your hub through your computer, smartphone, or through a personal assistant device like Amazon Echo, or Google Home.

How a smart home is set up.

Click to Enlarge!

 

What are the downsides?

Where ever technology goes there is always someone ready to exploit it, will this make your home vulnerable to hacking? There have already been some reports of abuse.

This is a rapidly developing technology, and it can be costly, and wildly variable. There are so many products out there it could take you weeks of research to learn everything.

Conclusions?

Setting up a program with your hub so you can holler at your personal assistant to turn off the lights or turn on the tv, while having echoes of a starship captain commanding his ship, in reality, is spending quite a bit of money and time to set everything up. If you want your Smart Home technology to perform useful tasks, you will have to buy several other devices after the starter kit. Our decision? We just ordered our Nest 2 Outdoor and 1 Indoor Camera Bundle.

 

How to Buy a Property With No or Low Money Down!

How to buy a property with no or low money down investment real estate http://jessicacoaches.com/2017/03/how-to-buy-a-property-with-no-or-low-money-down/

Most of us have heard that it is smart to have 20% downpayment to purchase a home.  And it is.  Your payments will be lower, less interest will be paid over the course of the loan with a large downpayment.  However, if you are using these loans as a vehicle to purchase an investment, meaning not just a place to live but to make money, it can be a wise choice for a variety of reasons.  There are also people who just prefer to own a home, though sometimes it does not make sense.  Check out this article about the pros and cons of homeownership:  What you need to know before you buy a home!

Loan Types

1. FHA – Federal Housing Administration. 3.5% Downpayment.
Pros: Low down payment, good for up to 4 unit properties, accepts lower credit scores.
Cons: MIP (Mortgage Insurance Premium)  this is additional insurance you must purchase and pay monthly with your mortgage which lowers buying power.  If you are competing with other offers with everything but the financing being the same, FHA tends not to get the contract.  This is because FHA loans have a base quality standards the house must maintain to loan on it, and the lender will often require repairs.

 
Can I get an FHA Loan? LendingTree.com
 

2. VA – Department of Veterans Affairs Loans 0% Downpayment
Pros: No down payment, good for up to four unit properties, mortgage insurance is only a one-time premium which gets wrapped into the loan.
Cons: None to speak of.  If you have access to a VA loan you should have a house.

 

3. Insured Conventional – 3% Downpayment
Pros: Low down payment, good for up to four units
Cons: Not as widely advertised, PMI (Premium Mortgage Insurance), this is additional insurance you must purchase and pay monthly with your mortgage which lowers buying power.

 

4. Seller Financing (Seller Carryback, Land Contract) – terms vary widely but can be low or no downpayment.
Pros:  You are dealing with a person so you may be able to negotiate your terms as there are no standards anyone is being held to. Closing fees will be lower as the mortgage company will not be charging fees such as the origination fee.  You can sometimes get this type of financing with lower credit scores.
Cons: They are harder to find, most people just want all the cash up front when they sell.  The interest rates can be much higher than standard loans.  When you default on a seller financed home the property reverts to the owner and does not go through a standard foreclosure or trustee auction.

 

5. USDA Rural Loans – 0% downpayment
Pros: No downpayment, low-interest rates, not just rural also encompasses small towns, available to people who would normally not qualify for loans.
Cons: There are strict property and borrower restrictions.  Check those out here: https://www.rd.usda.gov/programs-services/single-family-housing-direct-home-loans

  

Related: How I never have to pay another penny for my retirement at age 34 on a 30,000 per year salary!

Additional ways to keep up front costs down

1. Negotiate in 3% closing cost coverage into your purchase offer.  This will cover all other fees and leave you with just the down payment.  Be considerate of the seller though and know that this is worse for the seller then selling the property for 3% less due to commissions.

 

2. Purchase a HomePath.com property.  These are foreclosures and short sales.  They have low 3% down payments and often give 3% in closing costs.  They also work to accommodate the first time buyer, giving some homes owner occupant preference and try to make it easier to qualify for.

 

3. Pathway to Purchase Programs.  This program may or may not be renewed with the changes in the government.  It was downpayment assistance program.  There are income and purchase price limits, but they are relatively high.  There is a limitation to what cities the program is in.  For Tucson, AZ they would give up to $20,000 toward your mortgage.

 

4. NHF Grants (National Homebuyers Fund Inc.). http://www.nhfloan.org/programs/index.shtml   Non-repayable grants up to 5% of the mortgage amount.  Not available in all states.  Low to moderate income requirements.

 

5. Other Downpayment assistance programs.   Check out  http://downpaymentresource.com for a search of programs you could be eligible for.

 

6. Ask your lender to see what fees they will waive.  I have found the big lenders more willing to waive fees than small lenders.  Small lenders tend to work harder to get borderline qualifiers into loans though!

 


Do you have any experience with any of these?  Any that I missed?

I never have to pay into my retirement again!

How I never have to pay another penny for my retirement at 34 on a 30,000 per year salary. Financial Freedom. early retirement travel money real estate rentals investment fire money http://jessicacoaches.com/2017/03/never-pay-retirement-again/
How I never have to pay another penny for my retirement at 34 on a 30,000 per year salary. Financial Freedom. early retirement travel money real estate rentals investment fire money http://jessicacoaches.com/2017/03/never-pay-retirement-again/

That is right, if I decided to hold all my current investments and not pay another cent into my retirement, I could retire comfortably at 65.  What is my secret you may wonder?  Well, it isn’t a secret, this is a proven wealth building strategy that has been used for a very long time.  The only difference from then to now is it is easier to get into the game.

Here it is:  I have someone else investing in my retirement for me.

 

I am a real estate investor.  In particular a buy and hold rental property investor.  What this means is, I buy properties with the intention of keeping it forever, and renting it out to others.  Not only are my renters paying my mortgage, giving me more net worth every month by paying my principle down.   They are also giving me extra to set aside for rental management, repairs, and cash flow which can be used now for life or to get to that retirement faster.

 

If we just held everything we have now at our current rents we would have $3,700 dollars of monthly income at 64 which is when our longest mortgage finishes at.  This is a conservative estimate, paying for property management, capital expenses (big repairs averaged over time), and vacancies.  The best part, rent keeps up with inflation.  So $3,700 today will be the equivalent in the market in 2047.  Which for us would be a very comfortable lifestyle for us.

 

 

So how did a family on a 30,000 salary start real estate investing?  Houses are expensive!

 

Our six-part strategy to fast tracking our retirement:

 

1. Finding a property that needed fixing up and getting a good deal.

 

2. Choosing a property that had at least two units so we could live in one and rent the other out to help cover our costs. See:  House Hacking: Lets You Get Your Housing For Free

 

3. We leveraged ourselves with owner-occupied, low-downpayment, mortgages.   See:  How to Buy a Property With No or Low Money Down!

 

4. We lived in the unit we were renovating doing as much of the work ourselves as possible.  

 

5. We went slow.  This is not a story of buying four properties in one year.  We have been at this for six years and have three multi-unit properties.

 

6. We managed our money, we didn’t let our money manage us.  See: Are you tired of worrying about money?

 

 

Lessons from our first rental property:

 

-Don’t over improve the property for the area.  When you are living in something you tend to fix it up for you, don’t improve it to your standards, improve it to just above the average standard for a rental in your area.  You will be more worried about what renters will do to your property, and you just don’t get the money back.

 

-Rental properties are a numbers game.   Make sure you get all the data and give yourself a conservative cushion to make sure it will be a profitable rental after renovations.

 

-Separate the electricity between the units if it is not already done.  It is just so much more hassle to provide utilities included!

 

-It is better to jump in on something you think is good, than wait for perfect. Even though our first purchase was not the ideal purchase, it still built us wealth and taught us an innumerable amount of things.  It was better to jump in with some basic knowledge than procrastinating finding the perfect property.

 

Now, I don’t have to invest another penny in my retirement, but I am going to! A retirement age of 65 seems so far off and I think with dedication I am going to try to retire before my husband hits 40, which gives us….. just less than 2 years.  Think we can do it?

 

Do you have rental properties? Or are you wanting to get in the game?

Pathway to Financial Freedom Report!!! -Q2 2017

Income Report pathway to financial freedom report passive income investment real estate rentals travel full time http://jessicacoaches.com/2017/03/pathway-to-financial-freedom-report-q2-2017/
My family of five are on the road to financial freedom.  What that means to us is Mr. and Mrs. JessicaCoaches will no longer have to work time for money jobs!  Our goal is to get $2500 in cash flow and a nice cash buffer so we feel safe to say goodbye to the 9 to 5 and hello to more freedom and traveling!  This does not mean we will not be working, just that we get to choose what we do and where we do it.  We have done this on a very modest income, clawing our way forward, buying fixer upper properties, living in them, fixing them up ourselves, and then renting them out.

 


Rental A: 890/month average cash flow
Pros: Very hands-off income, fully managed, vacation rental allows us to stay there too.
Cons: Income is very variable and sporadic, get left holding a lot of bills while waiting to get paid.  Home is fully paid for and at peak earning capacity for us as we do not self-manage it, equity could be better spent elsewhere.  We likely over improved this rental.
Plans: Sell, possible owner financing, or finance to place equity elsewhere.

 

Rental B: 140/month cash flow
Pros: Very hands-off income, fully managed.  60k from being fully paid off and at that point will be looking at 1000/month cash flow unoptimized.  No vacancies in 5 years, rents a little low due to this.
Cons: Looking at some renovations when current occupants leave.  Could be making higher returns on money invested in another place.  Needs some improvements in order to refinance or sell.
Plans: Hold.

 

Rental C: 995/month rent no cash flow as we are living and finishing up renovation in main unit.
Pros: Best returns on investment, potential 82% cash on cash return.  Looking at 550/month cash flow when both units rented out and managed.  200k to payoff and 1750/month cash flow.
Cons: Still needs some more work, need to be careful not to over improve.
Plans: Hold and rent fully when we leave.

 

Blog: No Cash Flow, in negatives I do not wish to calculate out yet! ( I think I made $0.27 cents on my sidebar ad.)
Pros: Great growth potential, really learning a lot.
Cons: Quite a bit of time for no upfront rewards yet as I am new.
Plans: Work into affiliate marketing without being sleazy, finish book and market.

 

Coaching: 200/month
Pros: I enjoy it, location independent.
Cons: Can be emotionally exhausting.
Plans: Take on 2 more clients.

 

Negative Cash flow!
Renovation Debt:
550/month 4% interest, 3.5 years remaining, 20k balance.
Pros: Low interest.
Cons: Could hold back our financial freedom date.
Plans: Payoff with change in rental A.

 

Summary:
$1230 cash flow if traveling now and renting out our current residence.  We are close to half way there.  Potential goals/plans to get us there!
1. Refinance out negative 550 debt.
2. Buy another rental property.
3. Get better returns on Rental A through sale or finance.
4. Blog and Coaching increase.
5. Increase salaries to push us further faster!