How to Buy Your First 3 Properties (house hacking)

Today I’m going to share how to buy your first 3 properties.

Owning property offers many benefits and allows you to:

• Build your net worth.

• Secure your retirement.

• Create generational wealth.

Unfortunately, many think buying property is not possible these days.

Knowledge Is The Problem

To buy property, most people think you need:

• Great credit.

• The perfect job.

• A 20% down payment.

That's not the case.

There are many ways to buy property.

House hacking is a great option to buy your 1st, 2nd, or 3rd property.

House hacking helped me buy 7 properties.

Here's how to use it to buy your 1st, 2nd, or 3rd property:

Step 1: Learn About Loans

Making sense of loans is the first step.

For starters, do a loan pre-approval.

Find a loan officer who has at least 5 years of experience.

Most work on commission and only get paid when you buy— that's an advantage.

They're usually happy to help you figure things out.

A loan pre-approval usually takes a few days.

You may be ready to buy after going through the process.

Or you may need to work through a few things like:

• Paying off a bill.

• Saving more money.

• Making more money.

An experienced loan officer will help guide you.

Step 2: Pick A Strategy

Most people rush into buying after receiving a loan pre-approval.

It's best to slow down, take your time, and figure out a strategy first.

The best deal on a mortgage loan often requires you to live on the property for at least 1 year.

If doing that, you may not need a large down payment.

Options often include:

• 0% down (no money down)

• 3% down

• 5% down

Your loan officer will go over all of your options.

After learning more about loans.

You'll need to pick a house hacking strategy.

Three common ones include:

The Roommate Strategy

I used this strategy with 3 condos I bought.

Find a property you can buy and get a roommate.

Rent from a roommate often covers 25%-35% of your loan payment.

This makes it easier to save and qualify for your next property.

The Renter Strategy

I used this strategy with 2 houses I bought.

Find a property you can buy with a separate living area.

This is best if you don't want to share space with another person— but still want rental income.

For example:

• A house with a small livable unit in the backyard.

• A house with a mother-in-law unit upstairs with a separate entrance.

• A house with a garage converted into a living space with its own entrance.

The MultiFamily Strategy

Find a property with several units.

In the US, your down payment can be as low as 3.5% to buy a:

• Triplex

• Fourplex

This is usually a large building with 3 or 4 separate units.

The idea— live in 1 unit and rent out the rest.

Step 3: Review The Market

Check out your local real estate market.

Redfin is a helpful app you can download for free.

It geographically displays homes for sale.

When viewing a property on the app, you can use the built-in calculator.

It will help you figure out the monthly payment.

Understanding how much rent you'll receive is important.

You want to know how much rent you'll get while living on the property.

Maybe you rent out a room.

Or maybe you buy a property with a separate living area you can rent out.

It's also important to know how much rent you'll receive when you move out of the property.

At that point, you'll rent out the whole property.

If going the house hacking route, knowing these things in advance is important before you buy.

For example:

You don't want to have a $3,000 loan payment on a property.

But can only rent it out for $2,000.

Websites that can help you estimate rental income include:

• Zillow

• Craigslist

• Rentometer

Step 4: Repeat Over and Over

House hacking may seem confusing at first.

But it's a great way to get yourself a few properties without needing a bunch of money.

Here's an example of how to get your first 3 properties via "house hacking":

1st Property

1. Get a home loan pre-approval.

2. Buy a property with the loan.

3. Move into the new property.

4. Rent part of the property.

2nd Property

1. Get a home loan pre-approval.

2. Buy a property with the loan.

3. Move into the new property.

4. Rent part of the property.

5. Rent your 1st property.

3rd Property

1. Get a home loan pre-approval.

2. Buy a property with the loan.

3. Move into the new property.

4. Rent part of the property.

5. Rent the 2nd property.

Getting your first property is the most difficult (there's a lot to learn).

Rental income helps you qualify for a 2nd or 3rd property more easily.

Keep building 💰

See you next week.

P.S.

Want to see a few properties that make good rentals?

Try this:

3 Homes That Pay You
(what to look for when buying)