RE investing next steps?

[Juan Mazo]

I want some direction.

I own two properties. One is a multi in CT. The others a SFR in Las Vegas

The multi was purchased in 2015. I have about 200k in equity and it’s soon to be generating about 3300 a month. Roughly a 1300 profit after taxes etc etc. last year was a down year due to evictions and remodeling. this home is on a conventional loan.

Second property is in Vegas. Purchased last year as an SFR. It's being house hacked. I'm not showing any profits, but the gf is reporting the profit from the house hacking. this home is under an FHA purchase in October 2023.

Gf has been saving and has 40k. She has a tax issue. They filed her schedule C and E flipped. In either case she's paid the proper amount of taxes, just shows she owns properties when she doesn't. In either case, we are planning to amend 2023 and in 2024 taxes be able to purchase under an FHA.

My goal is to buy more property this year. I don’t really want to wait until October. Mostly because the GF doesn’t want to hold the 40k, she wishes to invest it asap.

I was looking at a 5% down payment product that my lender last year said I could do. She said no, it’s now a 10% down payment product.

GF is ok with buying at 10% down payment.

I wish to continue doing house hacking in Vegas. However, I am also open to remote ownership opportunities.

Any thoughts on what we can do?

[Ty Coutts]

Hello, Juan Mazo, given your situation and goals, here are some thoughts and steps you can consider:

1. Utilize Your Equity in the Multi-Family Property

Cash Out Refinance: Since your multi-family property in CT has significant equity (around $200k), consider doing a cash-out refinance. This would allow you to pull out some of that equity in the form of cash to use as a down payment for another property. The cash flow from this property ($1,300 profit after expenses) can also help support your ability to qualify for a refinance.

HELOC (Home Equity Line of Credit): Another option to access equity is through a HELOC. This gives you flexibility to draw funds as needed rather than taking a lump sum upfront.

2. Financing Options for Next Property Purchase

10% Down Payment Product: Since your lender has now suggested a 10% down payment product instead of the previously mentioned 5%, consider this option seriously. With a 10% down payment, you can still leverage your savings effectively while keeping some liquidity for reserves and future investments.

FHA Considerations: If you're considering another FHA loan, keep in mind the FHA rules regarding primary residence occupancy requirements. Since you're house hacking in Las Vegas, this should align with FHA guidelines as long as you continue to occupy one unit as your primary residence.

3. Investment Strategy

House Hacking in Las Vegas: Continue with the house hacking strategy in Las Vegas, as it allows you to live in one unit and rent out the others to cover a portion or all of your housing expenses. This strategy can be financially advantageous, especially with FHA financing.

Remote Ownership Opportunities: Explore opportunities for remote ownership if you're open to investing outside of your local area. This could involve hiring local property managers to handle day-to-day operations.

4. Addressing Tax Issues and Investment Readiness

Amending Taxes: Address the tax filing issue promptly by amending the 2023 taxes and ensuring correct reporting moving forward. This will help in applying for new financing and showing accurate income for loan qualification.

Investment of Savings: Invest the $40k savings strategically once the tax issue is resolved. Consider options such as adding to down payments, reserves, or investing in other income-producing assets aligned with your financial goals.

Next Steps

Talk to Lenders: Discuss your financing options with lenders, including the possibility of a cash-out refinance or HELOC on your CT property, and explore the 10% down payment product for your next purchase.

Real Estate Market Research: Identify potential markets or properties that fit your investment criteria, whether for house hacking in Las Vegas or remote ownership.

Consult Professionals: Engage with a real estate agent, tax advisor, and possibly a financial planner to ensure your investment strategy aligns with your long-term goals and financial health.

By leveraging your existing equity, navigating financing options, and resolving tax matters, you can position yourself and your girlfriend to successfully expand your real estate portfolio this year. 

I am a mortgage lender and can help give a lot of clarity and insights to you, so please call me at the number below if you would like to discuss further. 

[Jorge Vargas]

I sent you a message request. Im a local, i can find you properties and negotiate with the seller for a discount.

[Jonathan Greene]

Why are you keeping the property in CT? You could sell that and roll the profits into multiple downpayments closer to you so you can start to streamline management better and not pay for it. If your gf has 40k liquid, you need to count 15k of that for reserves on a next profit, so there is 25k to play with, not the whole boat. Take out fees, closing costs, etc. and that's maybe 15-18k to play with. So, I would both keep savings and consider dumping CT unless there is a strong reason to keep it living across the country.