WWYD: sell home use that money to start out OR get creative?

Question

Hi! Newbie here; what would you do.. longish post but a big question that's weighing on me. I've been dying to dive in, I listen to the BP podcast, read multiple books, take notes, the whole 9, I just havent started yet. I have the itch, BUT I'm conflicted. My husband & I moved to Florida a few years ago, but I have a feeling we should move back to our home state NY & start to BRRRR. I definitely cannot convince my husband to do long distance investing (yet) and I do not want to further my roots in FL (hence why moving back to NY to start). We do not have the capital to start up but we own a home that we added a lot of value to. I believe that with the sale of the house we could buy at least 2 properties to start; 1 to house hack & the other to BRRRR. We unfortuneately have a great rate on our current mortgage so giving that up in this market is not appealing but I know it could be worth the risk.

A few options I've thought of, do we try porting the mortgage to get a different house with that rate (which I know can be difficult), do we refi & use the money to move & start up with my above plan & rent out our FL house, or do we just start all over by selling and moving?

thank you so much for taking the time to read this & to help me :)

A few options I've thought of, do we try porting the mortgage to get a different house with that rate (which I know can be difficult), do we refi & use the money to move & start up with my above plan & rent out our FL house, or do we just start all over by selling and moving?

thank you so much for taking the time to read this & to help me :)

Travis Timmons · Answer

General advice for a newbie - don't get cute and go slow. I also am a believer that in 95% of situations it is better to sell the primary house rather than keep it as a rental. BRRRRs are also hard to pull off - you have to have some sort of unfair advantage to mitigate risk. Whether that be sourcing deals, ability to renovate at a lower cost, or specific market knowledge, rehabbing properties is the ultimate easier said than done RE category. Keep it simple, find a house hack, stabilize the asset and rents, then move on to the next one.

I'm in the middle of a BRRRR right now - our insurance dropped us, the funds that we were going to use for the $70k-ish of renovating fell through, so our 3-4 month project turned into a 10-12 month project of slowly fixing the place up (we can cover it, but it sucks). And when I walk into the gross, smelly, mess of the house that I thought was a good idea to own, it just reeks of anxiety inducing "this better work" vibes. You're not a proper investor until you ask yourself, "Why did I think this was a good idea?" several times.

Peter W. · Answer

I'm a newbie too, so take my advice with a grain of salt, and considering doing the opposite of you (in Upstate New York, thinking about investing in Florida and moving back to family down there).

A couple of thoughts to share. If you don't have kids yet a lot of folks (most famously Chip and Joanne Gaines) BRRRR by living in the house while it is being renovated.   This can work if you are low on cash and allows you to take advantage of primary residence financing, although I guess it isn't technically BRRRR, but similar enough.  It allows you to allow schedule slips without too much additional pain because you were paying the mortgage to live their regardless (although living in a house being remodeled can be a stressor).

Real estate investing, renting, and rehabbing are skills so expect things to be more expensive and take longer than expected. Try to play on easy mode as much as possible to begin with even if it cuts into your returns. I suspect investing long distance is not playing on easy mode so I agree with your husband on that.

In my case, I'm buying turn key in a B+ area of town, while I pick up the landlording skills.  Of course, it means my returns are likely going to be lower than the stock market, but it's about getting the skills on house 1 and seeing if I am cut out for this business (especially while working full time job and with small kids).

Garrett Brown · Answer

think you need to look at a couple options.

im not super familiar with NY but i dont believe its very landlord friendly so that is something to consider.

as far as your current home goes, the rate is just a rate. if selling it allows you to expand i dont think its the worst thing in the world. depending on equity, other options could be a heloc, or just cash out refi ( might be a painful payment jump though if your current rate is low like you stated ). id like to look at things as in 5 years from now would i be in a better situation if i did this or this? having multiple properties appreciating and giving cash flow is typically better in the long run than just 1.

David M. · Answer

@Amy Zagorski

I'd start over.  Don't get stuck on your rate.  If your "future" deals work, then go ahead.

I wouldn't let somebody else buy and pay your mortgage, i.e. a subject-to deal.  Too much risk for you and ties up your credit.  No point getting creative since it looks like you have the means.  That extra "creativity" isn't worth the risk in my opinion.

Also, don't forget you can potentially refi in the future should the rates drop...

You could also look into other investments while you may be waiting.. Just another idea..

Be happy to chat.  Congrats on the child, good luck.

Amy Zagorski · Answer

@Peter Woerner thank you Peter! I should have said we completed renovated 2 homes by ourselves while living in reno. we owned a home in NY and we decided to move to FL after a year and we sold for 25% more than what we bought it for. Our home in FL is likely a similiar story. We do have a child now, so renovating where we live will be way more challenging / probably not something I would be willing to do with all the filth that comes with rehabbing a home. But we do have the experience with totally rehabbing with minimal help (electric & plumbing we pay someone to do lol).

I'm not to concerned with immediate cash flow, we're more so looking to invest for the long term gain. So turn key B+ area would be a good idea too so we can build a portfolio & skills. But the issue will still be with the capital needed to get there.

Thank you & Good luck with your potential move :)

Amy Zagorski · Answer

Thank you both so much for your replies! It definitely gives me a lot to think about and work towards!

WWYD: sell home use that money to start out OR get creative?

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