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Re: House Hacking a Duplex in a HCOL Area?
Do you want to be in the rental business and share walls with your renters? This is something that some people choose to do and some don't. I'm not sure what the hack is supposed to be though.
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Re: House Hacking a Duplex in a HCOL Area?
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Last edited by Philip_Marlowe on Mon Oct 25, 2021 1:49 pm, edited 1 time in total.
Re: House Hacking a Duplex in a HCOL Area?
Despite the new term (“house hack”...lol), this is an old strategy. If you are going to do this, picking the right renter is essential. The wrong renter is going to bother you constantly for little things. The wrong re tee is going to pay you late. Yes, those things happen in regular rental scenarios but are louder when you share the building.
Re: House Hacking a Duplex in a HCOL Area?
"House Hacking is a phrase coined by BiggerPockets podcast host Brandon Turner (circa 2015). While Brandon came up with the cool sounding name, the concept has been alive for a long time. While the idea isn’t new, the popularity of it’s application is. As housing becomes increasingly less affordable, creative home buyers have adapted and are finding new ways to own a home without breaking the bank."London wrote: ↑Mon Oct 18, 2021 5:39 am Despite the new term (“house hack”...lol), this is an old strategy. If you are going to do this, picking the right renter is essential. The wrong renter is going to bother you constantly for little things. The wrong re tee is going to pay you late. Yes, those things happen in regular rental scenarios but are louder when you share the building.
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Re: House Hacking a Duplex in a HCOL Area?
I did exactly this in the late 90s when I first got married. Bought a duplex and lived it in for 6 years while renting out the other side. That unit’s rent paid 90% of my mortgage, which was great because I wasn’t making any money back then. I ended up selling it when someone called me up right after I had moved and offered me $50K more than I had bought it for. They paid cash day of closing. I still kick myself for selling that place. Would’ve been paid off and I’d be raking in the cash now. Lesson learned.
Added: oh yeah forgot about the being a landlord part. First Christmas Day with my kid, tenant calls me at 7am to tell me they have no heat (it was 20 degrees outside). That was not a fun day. Other than that always had great tenants
Added: oh yeah forgot about the being a landlord part. First Christmas Day with my kid, tenant calls me at 7am to tell me they have no heat (it was 20 degrees outside). That was not a fun day. Other than that always had great tenants
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Re: House Hacking a Duplex in a HCOL Area?
If you owner-occupy one half of a duplex, are you willing to equally share the property, deck, driveway, etc. with the renter? I passed on being a renter of a couple duplexes as the owner-landlords with families had a lot of ‘rules’ - yard/deck/driveway/garage/attic/cellar were only for their use, no tv/music after 10 so their kids could sleep, etc.
Having rented 1/2 of a newly constructed duplex for several years, the common walls allowed some noise, cigarette smoke and cooking smells. It was also awkward being outside and seeing into the windows/onto the deck of the neighbors and vice versa. A narrow shared driveway was a logistical nightmare especially with different work schedules.
Having rented 1/2 of a newly constructed duplex for several years, the common walls allowed some noise, cigarette smoke and cooking smells. It was also awkward being outside and seeing into the windows/onto the deck of the neighbors and vice versa. A narrow shared driveway was a logistical nightmare especially with different work schedules.
Re: House Hacking a Duplex in a HCOL Area?
The thing about house hacking in a HCOL is that you probably shouldn't look at the rental portion as a real estate investment but as something to help defray the cost of where you want to live. Real estate investors often use the "1% rule of thumb" that the monthly rent should be 1% of the acquisition price. I tend to use gross annual cap rate, so that's 1%/month * 12 months = 12%. In nice neighborhoods in my HCOL area, housing prices (when I was looking 2 years ago) would result in a cap rate of maybe 5%. But even if it's not as profitable, it's perfectly fine if you're willing to do the work of being a landlord (or pay a property manager) and it enables you to live where you want to live.
Re: House Hacking a Duplex in a HCOL Area?
This cannot be stated enough - be sure you know what you're getting into. I had a friend as well as a girlfriend who did this. When you're young and single it can be an adventure. When you're older, I'm not sure I'd want my renter knowing where I live and knocking on my door anytime they need/want something.London wrote: ↑Mon Oct 18, 2021 5:39 am Despite the new term (“house hack”...lol), this is an old strategy. If you are going to do this, picking the right renter is essential. The wrong renter is going to bother you constantly for little things. The wrong re tee is going to pay you late. Yes, those things happen in regular rental scenarios but are louder when you share the building.
Also, what if rent falls behind? My buddy had one person he had to evict, and it was like interpersonal warfare. He also started hooking up with one of his tenants, which made it awkward (and caused rent problems) when it ended
On the flipside, my old GF didn't have those problems.
Re: House Hacking a Duplex in a HCOL Area?
I owned & was a landlord for 20+ years. A good tenant is a godsend & a bad one will make you wish you never ventured into that business. Rest assured, the laws on the books are meant to protect the tenants & you will have your hands full trying to evict a bad one that refuses to vacate. This is especially true in today’s climate of “all landlords are bad & all tenants are good & virtuous”. Good luck!
Re: House Hacking a Duplex in a HCOL Area?
Depending on the specific HCOL area, it may be very difficult to find a duplex or triplex. Most municipalities have outlawed them in the majority of their land for the last several decades. Aiming for one with an ‘owners unit’ with three bedrooms will likely limit your search much more.
Make sure to factor in taxes. With your high earning, income above any write-offs will be highly taxed, so may not cover as much of ‘your’ housing expenses as you think.
I personally say go for it, but it’s a very personal decision. You will likely have to sacrifice on other desires you might have for a home because of very limited availability (unless we’re talking about an older area with brownstones that were built before restrictive zoning laws).
Make sure to factor in taxes. With your high earning, income above any write-offs will be highly taxed, so may not cover as much of ‘your’ housing expenses as you think.
I personally say go for it, but it’s a very personal decision. You will likely have to sacrifice on other desires you might have for a home because of very limited availability (unless we’re talking about an older area with brownstones that were built before restrictive zoning laws).
Re: House Hacking a Duplex in a HCOL Area?
In the Boston area this is a common building style for the past couple hundred years. There are tons of 2-family and 3-family properties, we live in a 2 family that we recently renovated and have tenants. We live on the 2nd floor, use most of the basement and the driveway and the yard. The tenants live on the 1st floor and have a porch and some use of the yard. It allows us to have a lot more space for only a little higher price, with little extra maintenance costs since the roof and foundation are shared. Living in the same building as the tenant gives us more landlord rights in our town. It is a very personal decision about how you want to live, but in this area a very common living arrangement.
Re: House Hacking a Duplex in a HCOL Area?
Given current rent to the prices you are listing, it seems like your best bet is to stay put until you actually have that second child.
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Re: House Hacking a Duplex in a HCOL Area?
What things tie you to the HCOL area? Spouse's job, personal/social connections, really love the specific amenities, etc.?
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Re: House Hacking a Duplex in a HCOL Area?
Be compliant with zoning. In VA, if a building inspector is contacted for a zoning violation, the name of the complainant is not released under the Freedom of Information Act. Also, once there is a rental agreement, ending the agreement might be a challenge.
When it works, it can work well. A friend does this in Richmond (Fan district) to a college professor; a friend in Denver does it for a member of the State Senate (he's only there full time during the legislative session and other times only randomly).
But renters and then the family members who end up in the house and their guests (including the four legged kinds) are always interesting cases on Judge Judy & Judge Rinder.
When it works, it can work well. A friend does this in Richmond (Fan district) to a college professor; a friend in Denver does it for a member of the State Senate (he's only there full time during the legislative session and other times only randomly).
But renters and then the family members who end up in the house and their guests (including the four legged kinds) are always interesting cases on Judge Judy & Judge Rinder.
"History is the memory of time, the life of the dead and the happiness of the living." Captain John Smith 1580-1631