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?

I Chose To Be Homeless For A Year!

I chose to be homeless for a year, minimalism, freedom, financial, travel, less, stuff, more, life http://jessicacoaches.com/2017/04/i-chose-to-be-homeless-for-a-year/

I often see these memes about adulting: the burden, the monotony, the reluctance.  When did we decide it was normal to hate what we do day in and day out.  Did we make a conscious choice to spend most of our time doing something we hate to get money?  Or did it just happen?  Why do people accept that the route to success is plodding away at a job for the majority of our lives, and the whole of our most productive ones at that?

 

 

So what happens when you say, F*** it! I don’t want to be a part of this system anymore!  Well, that is what I did, I quit my job, put in my 30-day notice on my apartment, and sold all my stuff. Everything that I owned could fit within the confines of one backpack.

 

 

I had no home.

 

I had no fixed expenses.

 

What I owned:
A Backpack.
Five shirts.
Five lightweight pants.
Five pairs of underwear.
Five lightweight Camis.
One pair of sandals. (Which at one point were stolen and replaced with 2 dollar thongs)
A jacket.
Airplane sized toiletries.
A brush.
A super pack of hair ties.
A Headlamp.
A small laptop.
My camera.
A water camelback.

 

THAT. IS. IT.
In the whole world!

 

I got a one-way ticket to Europe on the proceeds of my stuff and embarked on some of the best times of my life.  I did work trades for room and board,  which usually required around 25-30 hours a week of work to take care of all my needs.

I worked on a peace farm, the vineyard of a pair of circus performers, I lived with a British couple renovating an old castle into a B&B… which was complete with a haunting story and a dungeon.  I met interesting people, a villain from the old Bond movies who made a kick ass shepherds pie and referred to the local villagers as his “minions”. An old man who had traveled around the world by sailboat and had met Salvador Dali.  Peace activists who protested on the corner every week, I joined in! A man who got called away to advise huge companies during the 2008 financial collapse.  And I mentioned the circus performers, right? They juggled chainsaws! 

 

 

I found other kindred souls, and we would travel together for a month or two. People from all over the world who would give me a glimpse into life in their home country.

 

I learned about life in other cultures and saw things I will never forget.
I hitchhiked. I showered at many public facilities.  I got acquainted with everything free, libraries, festivals, public pools, and most importantly nature. I ate weird local delicacies and pub hopped with a few of my hosts.

 

 

 

My biggest takeaways:
Life is about experiences, not accumulation.
Love people, not things.
Material things only hold you down from true freedom.

 

You might be asking, well why are you not still doing this if it was so awesome!  My now husband and I ended up getting pregnant and could not live by the seat of our pants anymore.  The desire is still there, and now our family is close to going back out on the road again.  This time with a different kind of freedom.

 

 

At the heart of this is breaking out of the norm.  To create your system.  Which is what I’m trying to do now.  Or, you live outside of it, which is what I did when I chose to be homeless.  You can live a life where you choose how to spend your time.  You can do this the easy way by living outside and eschewing everything and live in the flow of the world.  Or you can put in some serious work and break the system!

 

 

CLICK TO ENLARGE

 

I would also like to give a shout out to the homeless who did not get there by choice.  And while I would like to tell those who are capable, that there are options.  Some just are not and in my opinion are a symptom of a sick society. Homeless and Housing Charities.

 

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

4 Ways Real Estate Could be Making You Money Right Now! Investment Properties, Rentals, Landlors, Cash Flow, Passive, Income, Appreciation, Leverage. http://jessicacoaches.com/2017/03/4-ways-real-estate-investing-could-be-making-you-money-right-now/

“People always need a place to live.”  This was a statement made by my real estate investment mentor.  He had been a real estate investor from the age of 20; he tried all manner of operations, land to single family homes; commercial store fronts to multi-family housing.  Slowly and steadily he weathered the economic climates, and he worked his way to an early retirement at 45.

Countless people are investors in real estate, some small like me who own only seven units, some big who own apartment complexes all over the place.  Some passive who have all their properties managed by someone else, some active who play the role of the property manager.  Real Estate should be in your portfolio.  When held for long times it is steady.  When leveraged the return percentages can be very high.  When fully paid off they are an amazing constant source of income.

An investment property is one that is purchased with the intent of making money.  Your home can build net wealth, but it is not an investment property unless it is multi-unit and you are renting the other units out.

 

1.  Leveraging yourself into a fortune.

Loans are still available at historic lows in the United States, when you compare our rates to the 15% of times past our buying power is stronger than ever.  The advantages of using a loan to purchase real estate are you can take a smaller amount of money to purchase a large asset that yields more money and which puts more money in your pocket every month.  It allows the little guy to get into the game and get great returns.

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

 

Rental Investment Properties Rate of Returns Why Two Houses is better than one, the power of leverage

Click to Enlarge.

2. Tax Deductions.

There are three ways to get tax deductions on investment properties.

  • Operating Expenses, these include but are not limited to property management, water bills you pay for the property, and repair costs.
  • Interest on Loans, your loan company will send you a tax form at the end of the year, and it will be a tax deduction.
  • Depreciation (Cost Recovery), this is only for investment properties, not your personal residence, this is an incentive from the government.  This tax incentive is to help counteract the natural wear and tear your investment receives. They deem the economic life of a property to be 27.5 years; the deduction is the properties purchase value divided evenly over that time per year.

 

3. Appreciation.

Real Estate does not have a static value, it changes with the market and time, however, over time almost all real estate in the United States has gained a great deal of value. This is a wonderful thing because it means that for long-term property investment keeps up with inflation and has the potential to yield you a great deal upon sale.

Two things of note:

  • When you invest only for appreciation short term, you are moving into a different investment strategy of speculation.
  • There can be significant capital gains taxes on home sales; please seek advice from a tax specialist for more details on this.

real estate rentals property investment passive income

4. Cash Flow.

This is my personal favorite of the four ways I am making money from real estate right now.  Cash flow is the reason people call Real Estate investing a passive income, and I would personally call it a mostly passive income.  Cash flow is the money that is generated from your asset in excess of the costs.  I use a conservative estimate of half of your rent going to losses, repairs, vacancies, and costs.  Many people use this to pay off additional on the mortgage, save for another investment, or just fund their life.

 

Are you ready to buy an investment property?  Get PreQualified before you talk to a Realtor!

Owning a Vacation Rental – Ready to Have That Winter Home and an Investment Too?

Owning a Vacation Rental, ready to have that winter home and an investment too jessica coaches real estate blogger life coach http://jessicacoaches.com/2017/03/owning-a-vacation-rental-ready-to-have-that-winter-home-and-an-investment-too/

Have you thought about buying a property near the beach? The mountains? You could vacation there whenever you want, a little home away from home, but it seems out of your reach? Or maybe you just hate finding, and paying inflated rates during yearly events, like our International Gem Show here in Tucson, AZ because everything is full, but wouldn’t imagine buying a house here because it would just sit empty for the rest of the year.

What if I told you: You can have that vacation home, and not only break even, but make a profit!

I have owned a vacation rental for a little over two years now and the gross yields off that vacation rental are over DOUBLE the gross yields of what it was getting as a month-to-month rental.  Keep in mind that vacation rentals have significantly more expenses though.  But, that means if you bought two homes, lived in one, and managed your own vacation rental out of the other it could potentially pay for both homes!!

 

 

 

 

 

 

 

Here are all the things I have learned during this time:

The Good-
1. No more hotel bills when you visit your favorite vacation spot! You have a home there. You can have all your stuff locked away in the garage or a storage cabinet so you feel like you just left.
2. Great money. In general, the yields off a vacation rental are higher than a normal rental. People will pay significantly more for shorter stays.
3. Lower wear and tear. On average you have a lower occupancy rate with more dates that no one is using your appliances, walking on your floors ect. The premises are also being cleaned regularly which helps with this a great deal.
4. There are management companies that will take care of the whole thing for you.  These vary widely in how much they charge and the extent of what they do.

The Bad-
1. Most of the time you want to go to your rental when everybody else does. I have decided to stay with family instead of at my vacation rental because I really wanted that 2k paycheck!
2. You might be the one stuck paying all the utilities and bills for the property if your manager does not do that. These homes tend to have everything you do at your home, internet, cable, water, ect. This is mostly just an inconvenience but something to keep in mind.
3. The risk is higher than a month-to-month rental. There are periods of time when you might have no renters, such as low tourist season. You will still have to pay all those bills, and maybe a mortgage, while there is no money coming in. This will need to be planned for by saving back some earnings from better times of the year.

 

What are your experiences? Do you own a vacation rental or would you like to?

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 to come in with no or low down payments.  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.  It does not have to be your first home or only loan, just your only FHA loan.
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 get that downpayment and keep upfront costs lower
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?