Grow your real estate investing business with the most competitive and transparent private lender for bridge loans (hard money, fix & flip, rehab, ground up construction), DSCR rental loans.

Private Lender for DSCR Loans and Fix & Flip Loans | OfferMarket

Private Lender for DSCR Loans and Fix & Flip Loans

#### What does PITI mean?

 

PITI stands for Principal, Interest, Taxes and Insurance. Aside from maintenance, these are the core expenses of owning a house. Typically, your monthly payment to your lender or mortgage servicer includes all of these costs.

 

For example, let's say you buy a home for $250,000 with a 5% down payment on a mortgage loan at 3% interest, 1% [PMI](https://www.offermarket.us/real-estate-glossary/pmi), 1% property tax and $1,000/month property insurance. Using our [mortgage calculator](https://www.offermarket.us/tools/mortgage-calculator), you can see that your monthly PITI would be just under $1,500.

PITI stands for mortgage principal, interest, taxes and insurance. Learn more about PITI at OfferMarket.

PITI - Principal Interest Taxes and Insurance - Real Estate Glossary

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PITI - Real Estate Glossary - OfferMarket

What is PITI in real estate? 

Funds from construction loans (commonly referred to as "fix and flip" and "bridge" loans) are disbursed to the borrower via draw request. A draw request typically involves a submission of invoices and receipts of work performed and materials purchased associated with work that has been completed per the scope of work (SOW) or budget that is submitted to your lender. 

 

## How to schedule a draw request

 

The borrower or the general contractor representing the borrower will then schedule a draw inspection with the lender. An inspector representing the lender will visit the job site and confirm the work completed and materials on site so the lender can reimburse based on the inspected progress.

 

## Get a quote for a fix and flip construction loan from OfferMarket Capital

 

OfferMarket Capital is our private lending platform. We are on a mission to help you grow your real estate investing business by providing you with the most competitive, transparent and simple private lending experience. Our products include no doc fix and flip and DSCR rental loans. **[Get your quote today!](https://www.offermarket.us/capital)**

 

## More about draw requests

 

[What is the draw request process for OfferMarket Capital construction loans?](https://www.offermarket.us/frequently-asked-questions/what-is-the-draw-request-process-for-offermarket-capital-construction-loans)

A draw request is how construction loans (fix and flip, bridge) are 

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What is a draw request? | OfferMarket Real Estate Glossary

What is a draw request?

**Last updated:** November 6, 2023

 

## 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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House Hacking - November 2023

A fourplex is another word for quadplex. Please visit our [quadplex](https://www.offermarket.us/real-estate-glossary/quadplex) overview to learn more. 

 

#### Related concepts:

 

- [SFR](https://www.offermarket.us/real-estate-glossary/sfr)
- [Duplex](https://www.offermarket.us/real-estate-glossary/duplex)
- [Triplex](https://www.offermarket.us/real-estate-glossary/triplex)
- [Quadplex](https://www.offermarket.us/real-estate-glossary/quadplex)
- [House Hacking](https://www.offermarket.us/real-estate-glossary/house-hacking)

A fourplex is a 4-unit house. Fourplexes are very attractive to rental property investors. There's more to learn about fourplexes at OfferMarket. 