Learn how to write wholesale real estate offer letters, use assignable contracts, avoid common mistakes, and close deals faster with OfferMarket’s Get Offers Contract, OM Intelligence and Cash Offer Calculator.

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Wholesale Real Estate Offer Letter | OfferMarket

Wholesale Real Estate Offer Letter

Learn how to find private lenders for real estate investments. Get practical tips, strategies, and networking methods to secure funding quickly.

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How to Find Private Lenders for Real Estate: Complete Guide

How to Find Private Lenders for Your Real Estate Investments: Simple Steps to Start

### *We don't have a housing shortage. We have a shortage of desirable houses.*

 

In this article, we will explain the difference, and what real estate investors like you can do to profit from this misunderstood reality.

 

## Problem: Shortage Of Houses In Desirable Markets

 

Now that work from home has become widely acceptable, and the new normal, an overwhelming number of people have decided to pick up and relocate to one of several more attractive markets. This includes "sun belt", lower tax, and economically well-positioned destinations such as Phoenix, San Antonio, Jacksonville, Tampa, Orlando, West Palm Beach, Miami, Raleigh, Columbus, etc.

 

The problem is, there simply aren't enough enough homes for all of the people that want to move to these locations. A basic supply and demand imbalance has caused home prices in these markets to skyrocket. 

 

To use emojis, you have people 🧑🏾‍🤝‍🧑🏽 who have the same idea💡 to live some place nice 🌴 so they move there 🚚 and try to buy the same houses 🏠 which causes the houses to dramatically increase in price 📈 💰🚀.

 

## Solution for Investors: Build More Homes

 

If you're a real estate investor, you can profit by increasing the housing supply in these markets. You can use OfferMarket's Ground Up Construction program to fund land acquisition and construction budget -- up to 60% of the land cost and 100% of construction.

 

## Solution for Buyers: Consider Other Markets

 

Make no mistake, there is a housing bubble and mania that has swept through many regions and markets. Fear of missing out is real, and can drive people to make decisions that they later come to regret. Avoid overpaying for your next home. Avoid bidding wars and settling on a home that you otherwise would not be interested in buying in a normal market. 

 

Take a step back and re-evaluate your options:

 

- What are some less well-known markets that offer better value and are fundamentally attractive with good prospects for long term home price appreciation?
- Does it make sense to move right now, or can you afford to be patient and let this housing mania and bubble deflate?
- Are there off market fixer uppers available for a better value? [Subscribe to our off market deal flow](https://www.offermarket.us/survey/subscribe/deal-flow).

 

## Shortage Of Houses In Desirable Condition

 

There is a strong preference among buyers to want turnkey, move-in ready homes. It makes sense: the last thing buyers want to do after paying the down payment on a home is to coordinate moving into a home that needs to be renovated. Not only is it an additional cost, it's a logistical complication figuring out timing to move, contractors, planning the DIY components to save money. The limited housing supply on the market has moved many savvy, daring and well capitalized buyers to consider properties that need fixing.

 

## Solution for Investors: Renovate More Homes

 

Fix and flip investors are important participants in the housing market. It's one thing to encourage investors to flip more homes, it's another to actually find the distressed inventory (i.e. houses in poor condition) required to increase the number of homes being flipped in a given market.

 

To find more inventory:

 

- [Subscribe to off market deal flow](https://www.offermarket.us/survey/subscribe/deal-flow)
- Network with wholesalers
- Drive for dollars -- look for distressed houses in your market and get in contact with the owner

 

To fund your fix and flip projects, [get a bridge loan quote from OfferMarket](https://www.offermarket.us/loans). We fund up to 90% of the purchase price and 100% of the rehab and can close your transaction in 15 days. This type of loan is commonly referred to at "fix and flip" and "hard money".

 

## Solution for Buyers: Consider Fixer Upper Houses

 

Buying a fixer upper is a great way build home equity and wealth. There are loan programs for primary residence homebuyers such as the [FHA 203k]9https://www.offermarket.us/real-estate-glossary/fha-203k-loan) renovation loan that includes the scope of repairs in your mortgage, allowing you to put as little as 3.5% down and have your rehab component added to your mortgage. 

 

## Summary: Focus On Value

 

Think like value investor. Real estate is an asset, and should be thought of as an investment. As with the stock market, if everyone is chasing the same investment strategy, a bubble forms, prices get out of control, animal spirits and FOMO make buyers overpay. 

 

Focus on markets and inventory that is less desirable. That is where the value is. There will be times when the most attractive markets present attractive buying opportunities -- think aftermath of the 2008 financial crisis (2009-12) in South Florida. That time is not now. Cooler heads and a disciplined approach will prevail.

We don't have a housing shortage. We have a shortage of desirable housing and that is an important distinction that real estate investors can profit from.

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What Housing Shortage? | OfferMarket Blog

What Housing Shortage?

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket provides DSCR rental loans, bridge loans, hard money, fix and flip, slow flip, and ground up construction loans.

Private Lending | OfferMarket

Private Lending

What is house hacking?

House hacking calculator

Should I house hack?

Who can become a house hacker?

Is house hacking worth it

Is house hacking legal

What are the risks of house hacking?

House hacking rental strategy

Best places to house hack

468 unit SUPER SIZE house hack with Stewart Beal

**Last updated:** April 15, 2024

 

## What is house hacking?

 

House hacking is the act of buying a house to live in and rent out the additional rooms or units in order to cover some or all of your monthly [PITI](https://www.offermarket.us/real-estate-glossary/piti) living expenses. So your tenant lives in the property along with you. 

 

For example, let's say you buy a single family house with 4 bedrooms for $250,000. Before you buy, you use a [mortgage calculator](https://www.offermarket.us/tools/mortgage-calculator) to understand your monthly principal, interest, taxes and insurance (["PITI"](https://www.offermarket.us/real-estate-glossary/piti)) expense. With a 5% down payment of $12,500 (not including closing costs), your monthly mortgage payment is $1,500 and you budget another $250 per month for maintenance. So your cost of ownership is $1,750. 

 

Prior to buying, you were renting a bedroom in a similar house in the neighborhood for $700 per month. You figure you can rent out 3 of the 4 bedrooms in your new house for $2,100. Every month, your 3 tenants pay you monthly rental income of $2,100. You use that money to pay your monthly PITI expense and you have $350 in [free cash flow](https://www.offermarket.us/real-estate-glossary/free-cash-flow) after setting aside $250 for maintenance. Your tenants are essentially buying your house for you and paying you to live there. This is house hacking.

To execute on this strategy it is ideal to find multi unit properties that will enable you to comfortable live along with your tenants. There are many varieties of house hacking strategies, but the core idea is always the same, you live under one roof with your tenants in order to share expenses. This way, a successful house hacker have lived in one unit and rented the rest of them out to other tenants. Many house hackers also become real estate agent so they can have an informational edge when they decide to start growing their rental portfolio.

 

After a year, you realize market rent has risen to $750 per bedroom, so you raise rent and your free cash flow increases to $500 per month. Ultimately, the goal, is to live for free in the property after a few years have passed.

 

## House hacking calculator

 

Access our **house hack calculator** to evaluate deals and submit offers for your next house hack home purchase. Email hello@offermarket.us with the subject: *House Hack Calculator* and a member of our team will provide you with our early access feature.

 

## Should I house hack?

 

House hacking can always be feasible. Even if you have a family and you want privacy, you can buy a [duplex](https://www.offermarket.us/real-estate-glossary/duplex), [triplex](https://www.offermarket.us/real-estate-glossary/triplex) or [quadplex](https://www.offermarket.us/real-estate-glossary/quadplex) and rent out separate units instead of living with strangers in a single family house.

 

## Who can become a house hacker?

 

Anyone who has enough start up capital to purchase or get a downpayment for a property with multiple rooms, so they can live in one unit or room and rent the remaining rooms out to their tenants. 

 

## Is house hacking worth it

 

[Cash on cash return](https://www.offermarket.us/real-estate-glossary/cash-on-cash-return) is arguably the most important rental property investing metric. It is the truest sense of capital efficiency. House hacking produces some of the highest achievable cash on cash returns. Another benefit of house hacking is that you qualify for primary residence interest rates and down payment requirements as well as [FHA 203k](https://www.offermarket.us/real-estate-glossary/fha-203k-loan) rehabilitation loans. In total yes, it makes financial sense to house hack, there are many many financial benefits to do it and can put you on a path for financial independence and grow your real estate portfolio.

 

## Is house hacking legal

 

Yes, house hacking is legal! If you own a single family property, you can rent individual rooms. If you own a duplex, triplex or a quadplex, you can rent out the individual units that you don't live in.

 

## What are the risks of house hacking?

 

There are a few risks associated with house hacking. Let's say you buy your property, but you decided to get a fixer upper that needed a lot of work and doesn't have a curb appeal. You might have trouble finding renters to fill your vacancies and you will be left with a large mortgage for all the empty space that you were not able to rent out. Then on top of that, to increate the curb appeal you will have to have cash outlay to supplies and potentially labor (if you are not a professional handyman) to repair the dwelling and bring its curb appeal to the point where its easy to find additional tenant to fill in the vacant space. Let's say you finally fill all the vacancies and after sometime your tenants become a bit too comfortable living along with you and their real habits become an impediment to you or your other tenant. This can scare off your tenants or even worse make your life style a nightmare. While you do have some control over renewals of their leases, that might mean that you will have to put up with their antics until the end of the lease term if their behavior is just "walking the line" and not actually breaking any lease terms. 

 

Additionally, there might be some social risks carries with house hacking, depending on how old you are, your parents, family and friends might have expectations about your social status. It's difficult to be a thirty something and still be living with roommates. Also, dating might be more difficult due to present of tenants. Imagine if you have kids, how would that work if you had several tenants living under one roof along with your wife. These are all important considerations to take into the account as you embark on your house hacking journey. Sometimes it's might be well worth it to endure such situation for several years to gain a solid financial footing that will pave the way for your real estate rental portfolio. 

 

## House hacking rental strategy

 

Many real estate investors start their real estate investing journey with a house hack. Then, when they have saved up enough money to buy a second property, they fill their room or apartment unit and move into the new house and do the same thing over again. If you have a stable source of income and you want to build generational wealth through real estate, house hacking is one of the most powerful tools that you should be aware of. By doing this over and over again, many of them were able to achieve financial independence. House hacking is a great way to kick start a rental portfolio that can earn passive income and lead to financial freedom. 

 

## Best places to house hack

 

House hacking is a great real estate investing and cost saving strategy in any market where you can find qualified tenants whose total rent payments will contribute substantially to your monthly mortgage payment. Therefore, there is no specific best place to house hack. One can argue that the best places to house hack are markets where there is high demand, strong prospects for home price appreciation, and where otherwise it would be difficult to afford. Based on this logic, house hacking in California and house hacking NYC are worthy options.

 

Our thoughts on house hacking are [featured in FortuneBuilders](www.fortunebuilders.com/what-is-house-hacking/).

 

## 468 unit SUPER SIZE house hack with Stewart Beal

 

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House hacking is the process of buying a house that you live in and rent out in order to cover part or all of your monthly expenses.

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