Ruesink Update – House Hacking

Jake and I are doing exciting things!…and no, tiny humans are not involved.

If you follow me on social media, you may have heard already that Jake and I are embarking on our next big adventure! And no, it does not involve a tiny human.

This week, Jake and I closed on our second home, a house just a few minutes South West of our condo in Austin. We absolutely love our condo and are sad to be leaving it but we’re very excited about our new adventure. Now, you may be thinking, “Jackie, didn’t you just get your condo? Haven’t you been married less than a year? How and why are you buying a second home already?” Well, my curious friend, I’m happy to answer all of your questions!

Jake and I bought our condo in November of 2016. It’s small, cute, and in a fantastic location in Austin, within walking distance of a Torchy’s Tacos. It’s in a quiet community, on a bus line, and is no more or less space than we’ve needed for just the two of us and Stella. We really hit the jackpot with this one.

But Jake has spent the last few years studying the real estate philosophy made popular by BiggerPockets called House Hacking. The idea behind house hacking is that instead of buying a single-family home, you buy a multi-family home (duplex, triplex, or 4-plex) and live in one unit while renting out the rest. This allows you to essentially live for free and even make a profit. So using this philosophy, we’ll be renting out our sweet little condo and learning how to be awesome landlords.

“But, Jackie, you bought a single-family home…that doesn’t count, does it?”

Well, no, not exactly. Single-family homes aren’t exactly what BiggerPockets suggests as ideal for house hacking. Jake and I tried to buy a duplex but ran into some tricky financial boundaries that we just couldn’t commit to right now. We tried and learned and now we know some of the restrictions we’ll face if we attempt to buy a multi-family property again in the future.

The current plan for our new adventure is to live in this house for the next few years, fixing it up, and renting out rooms on Airbnb to help fund our home improvement projects. Once we’ve saved enough and are ready to move on, we’ll rent this house out just like we’re renting the condo and move on to Property #3. We’ll continue this process until either managing multiple properties gets to be too much or until we decide we actually hate moving and should really stop.

While Jake and I may not be following the ideal house hacking model, ideally we’ll be setting ourselves up for a secure financial future that will allow us the freedom to spend our lives doing what we feel is most important: loving God and serving others.

“But Jackie, you know nothing about being a landlord. What on earth makes you think you’ll be able to do this?”

You’re absolutely right. As of maybe a month ago, I knew nothing about what it takes to be a great landlord. But I’m learning. BiggerPockets literally wrote the book on managing rental properties and Jake and I have been studying like college students who care. We’re approaching this whole management thing like a business, and as such Jake is putting his degree to work while I’m getting some hands-on experience setting up efficient business processes. We have a lot to learn and I’m sure we’ll find in this process that we don’t know nearly as much as we think we do but we are nevertheless positively pumped to fail and learn and succeed.

All of this to say, the Ruesinks really are up to something big and we would love your prayers as we take on this new challenge. Ultimately, we’re hoping that God uses this adventure as an opportunity to minister for His kingdom. However, we’d also appreciate prayers for our marriage as we’re basically going into business together which certainly adds a new dynamic to our relationship.

Finally, we’d like prayers for our hearts to resist the compulsion of greed. Yes, financial security would be great but God does not say that Christian’s lives will be financially secure. We are repeatedly told that as believers, we can expect to encounter hard times. While the financial benefits of our plan are appealing, we want to focus our hearts not on money (which God can take away whenever He so desires) but on the lives we’ll have a chance to impact through the doors this adventure opens.

Jake and I recognize that God has given us more than we need in this life and we want to be good stewards of everything that he’s given us. We want to enter into this adventure with the intentional mindset that what resources we have are God’s first and we’re just taking care of things for Him. We appreciate your prayers as we move into this exciting next phase of life and we cannot wait to see what’s in store for us!

How to Adult: Home Buying Basics

Know nothing about buying a home? Me neither. And I’ve done it. Let’s learn the basics together!

Adobe Spark (10)Facebook kindly reminded me that Jake and I put the offer on our condo in a little over a year ago and I was a pretty blown away. Most days, I don’t feel old enough to not live with my parents, much less to be playing house in a place that I own with my best friend who I married. What is this life?

I moved into our tiny little condo in a super cool part of Austin in November of 2016 before Jake and I were married the following January. This place is our first home and our first giant leap into adulthood. We’re still learning a lot about taking care of it and what it means to be good stewards of a physical home and at the same time, we’re already looking ahead to home #2.

As much as we love our tiny city bungalow, Jake has a dream to follow that includes owning lots of different kinds of properties throughout the Austin area. It’s a pretty brilliant dream and if we can scramble the money to get it started, I think it’ll really work out.

He’s been reading books and listening to podcasts and learning as much as he can about real estate and even though I can say I’ve bought a home now, I’m still not entirely sure how that happened. All I know is that I basically signed my life away and they handed me keys.

For those who, like me, aren’t sure what the home buying process looks like, I’ve had Jake re-explain it to me. I feel like it’s something we should know as adult-type people so let’s learn together, shall we?*

*For the sake of clarity, this is a very easy purchase I’m describing. Things can get pretty fuzzy with negotiations so let’s just assume your first offer is accepted to make this easier on everyone.

Step 1: Have money

A standard down payment (the money you have to pay immediately upon purchase) is about 10% of the total price plus closing costs (fees for inspections and the company that manages the title transfer). For second homes and on, the down payment is typically 20%. So know what you’re price range is and start saving. Don’t know what your price range is? See Step 2!

Pro Tip from Jake: If you’re willing to manage some risk with a fixer upper, check out a 203K loan. These can lower your down payment to 4% and include the cost of renovation within your mortgage, which is usually something you cannot do.

Step 2: Get more money (Get Pre-Qualified/Pre-Approved)

This is the part where lenders (banks) and mortgage companies look at all the things in your life and tell you what you can afford and what they’re willing to loan you. When I say they look at all the things, I mean all the things. Pull out your W-2s from the last few years along with tax documents and anything you find important because they’ll probably want to see that too.

Pro Tip from Jake: You can start doing this now. Your lender’s list might not match this list exactly, but it helps to know what you’ll need ahead of time.

Step 3: Choose an agent and shop around

Having an agent isn’t technically necessary but it’s definitely helpful. Real Estate agents know the market and they can help you get into the homes you want to see. They’re also super handy to have around if you’re not sure what to offer or if you’re not sure what’s going on with price or contract negotiations. They’re your advocate throughout the buying process so find someone with a good reputation in your area and find your new home!

Step 4: Make an offer

Once you’ve found your dream home, you’ll want to make an offer. If you have an agent, they’ll probably have a good estimate in mind for what you should offer based on all the information they have stored in their noggins about the market, location/size/state of your desired property. They’ll draft a contract with the offer price and any terms that will need to be met for the transaction to be successful and legal (see where things get fuzzy?). Make sure your offer has an option period with enough time for you to schedule an inspector.

Step 5: Secure your mortgage

Once your offer has been approved, you’ll need to fill your lender in on the deets and secure your interest rate. Interest rates can be fixed (meaning you’ll pay the same amount of interest consistently the whole time you pay your mortgage) or adjustable (meaning the interest rate changes over time based on whatever’s happening with the housing market). Generally, you want a fixed interest rate that’s as low as possible.

Step 6: Inspections

As a buyer, you’ll call out someone to inspect the property to make sure there’s no crazy damage you weren’t aware of and generally give you a better idea about what you’re buying. If your inspector suggests upgrades need to be made or lets you know that there’s water damage in the ceiling, this can throw off the contract you’ve negotiated with the seller which takes time to get adjusted in a way that makes all parties happy. During this time, buyers and sellers still have the option to back out of the deal.

Pro Tip from Jake: Make sure you write down everything your inspector says. You’ll likely have things they suggest to get fixed or upgraded. And then maybe not put it off forever like we have.

Step 7: Close

Get ready for your hand to fall off because here’s where you sign your life away. But once you do, and once you hand over that nice big fat down payment check and closing fees, they hand you keys and the whole thing is over. You bought a home!

That’s not too bad to understand, right? Maybe I’ll have it down better for property #2. Have you bought a home? What was most confusing to you about the process? Most fun?