New Investor: LLC or Individual - House Hack or BRRR Method
Member since 2026 · 3 posts · 6 votes
New Investor: LLC or Individual - House Hack or BRRR Method
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Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
7mo@Mitchell Becker, a few thoughts:
1. If you house hack your decision is made. You will need to buy in your own name and live in the property. A house hack in desirable in part because you can use conventional conforming loans like FHA loans with low down payments intended only for primary residences.
2. If you use a single member LLC or invest in your own personal name is immaterial for tax purposes because a single member LLC is a "disregarded entity" for IRS purposes. So, the LLC's business gets rolled into your personal income taxes.
3. An LLC is only really for liability purposes and when you are just starting out, do you really have a lot of personal assets you are concerned about? The LLC IF USED CORRECTLY can provide liability protection so if someone related to your investments sues you your personal assets are protected, BUT ONLY if you use it correctly.
4. One of the decision makers for whether to invest in an LLC or in your personal name is often cost. Some states make having an LLC cost prohibitive for a small landlord/investor. In states where it is cheap, then it is a cheap liability insurance.
5. You can always buy an umbrella liability policy to protect yourself whether you invest within an LLC or especially if you invest in your personal name.
6. You have $30k to invest. Many BRRRR investors either use their own cash or hard money loans to to the initial purchase and rehab. Often hard money lenders want experience which you don't have. I doubt $30k will cover a purchase and rehab even in a very cheap market these days. So, unless you have access to more $$$, I'm not sure if a BRRRR is viable.
7. A house hack probably makes sense, but perhaps you can find something with potential for cosmetic updates so you can do work to increase its value and maximize rents.
11 Replies
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes7mo
@Mitchell Becker, a few thoughts:
1. If you house hack your decision is made. You will need to buy in your own name and live in the property. A house hack in desirable in part because you can use conventional conforming loans like FHA loans with low down payments intended only for primary residences.
2. If you use a single member LLC or invest in your own personal name is immaterial for tax purposes because a single member LLC is a "disregarded entity" for IRS purposes. So, the LLC's business gets rolled into your personal income taxes.
3. An LLC is only really for liability purposes and when you are just starting out, do you really have a lot of personal assets you are concerned about? The LLC IF USED CORRECTLY can provide liability protection so if someone related to your investments sues you your personal assets are protected, BUT ONLY if you use it correctly.
4. One of the decision makers for whether to invest in an LLC or in your personal name is often cost. Some states make having an LLC cost prohibitive for a small landlord/investor. In states where it is cheap, then it is a cheap liability insurance.
5. You can always buy an umbrella liability policy to protect yourself whether you invest within an LLC or especially if you invest in your personal name.
6. You have $30k to invest. Many BRRRR investors either use their own cash or hard money loans to to the initial purchase and rehab. Often hard money lenders want experience which you don't have. I doubt $30k will cover a purchase and rehab even in a very cheap market these days. So, unless you have access to more $$$, I'm not sure if a BRRRR is viable.
7. A house hack probably makes sense, but perhaps you can find something with potential for cosmetic updates so you can do work to increase its value and maximize rents.
- 7moMike PaolucciBusiness MemberRealtor · Columbus Cleveland Dayton, OH · Member since 2022 · 499 posts · 553 votes
Quote from @Mitchell Becker:
Hello everyone, I'm looking to connect regarding investment strategies. I am first time real estate investor looking to buy in the west metro. House Hack or BRRR: I am a recent grad still living at home, and am looking to purchase a single family home to move into. I am torn between purchasing a cheaper home that needs rehab, and do the BRRRR method for future properties, or go the house hacking route into something more move in ready for my first property. At the moment I am pre approved for $200,000, and have about $30,000 for a down payment. Taking this into consideration, I would appreciate any advice as to how to approach my first investment. LLC or Individual: I am also looking for any guidance regarding the pros and cons of buying my first property in an LLC, or in my own name. Is there a better option between the two for a first time home buyer? I appreciate any and all guidance, I look forward to connecting!1. Are you able to find a duplex in that price range to house hack? If you're able to find that, I'd recommend house hacking a duplex over a BRRRR right out of the gates. If you buy the right duplex, you'll be cashflowing once you move out and get it rented out at market rates.
2. Conventional loans will not allow you to close in your LLC. You'll be required to close via your personal name. What most people do is quitclaim deed it into their LLC as a result (if that's what you want to do).
3. I normally recommend a turnkey single family or a LIGHT cosmetic update property as a first investment. Don't go down the rabbit hole of buying a heavy lift property. Too much risk and hassle for your first investment property. You want to start with a good foundation while you learn construction, maintenance and management of a property.
Reafco - Mike Paolucci 512 Reviews- Member since 2026 · 3 posts · 6 votes7mo
@Mike Paolucci unfortunately it has proven to be pretty difficult in finding a duplex that fits within my approval, without it needing some intense care. Does it makes sense/ is it a good strategy to buy a turnkey single family that I will live in, if it will cash flow when we move out? I'm struggling to see how I'm able to speed up the process of getting into more properties without saving up capital again if I pursue that. Is this just the reality of my situation at the moment? What do you recommend?Thanks!
- Lender · Scottsdale, AZ · Member since 2026 · 18 posts · 15 votes7mo
On the lending side, house hacking is hands down the play here. With $30k down on a $200k purchase you're at 15% down, which on a conventional owner-occupied loan gets you a solid rate, way better than anything you'd get on the investment side. You'll have PMI until you hit 80% LTV but that's still way cheaper than the 20-25% down you'd need for an investment property loan, plus your rate would be 50-75bps higher on the investment side and reserves requirements kick in. At your price point, buying owner-occ first lets you get in with the best terms, build equity for a year, then when you're ready for property two you can go conventional investment or DSCR depending on where you're at. Don't overthink the LLC piece right now, most lenders won't close a conventional loan to an LLC anyway and you can always deed it over after closing if you really want that.
- 7moKyle DeutschmannPro MemberInvestor · Washington, DC · Member since 2017 · 428 posts · 205 votesHey Mitchell, congrats on taking this step toward buying your first property! I personally started with house hacking and think it’s a great way to get your feet wet, gain experience as a landlord, and start building equity with a low down payment. If it’s a primary residence, you can often buy a single-family home with 0-5% down and rent out rooms, an ADU/in-law suite, etc. to help cover part or all of the mortgage.
Quote from @Mitchell Becker:
Hello everyone, I'm looking to connect regarding investment strategies. I am first time real estate investor looking to buy in the west metro. House Hack or BRRR: I am a recent grad still living at home, and am looking to purchase a single family home to move into. I am torn between purchasing a cheaper home that needs rehab, and do the BRRRR method for future properties, or go the house hacking route into something more move in ready for my first property. At the moment I am pre approved for $200,000, and have about $30,000 for a down payment. Taking this into consideration, I would appreciate any advice as to how to approach my first investment. LLC or Individual: I am also looking for any guidance regarding the pros and cons of buying my first property in an LLC, or in my own name. Is there a better option between the two for a first time home buyer? I appreciate any and all guidance, I look forward to connecting!
With those types of loan products, you generally cannot close with the property in an LLC. If you later move out and rent the property fully, you could refinance into something like a DSCR loan, which can allow you to hold the property in an LLC.
I’d also recommend putting less money down on the first property and keeping more in liquid reserves in case repairs come up or it takes longer than expected to find tenants.
You could also consider a hybrid house-hack/BRRR approach - look for something a little outdated but still able to pass a conventional or FHA appraisal, then do a light rehab while living there to add some value and gain some experience dealing with contractors. - 7moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Quote from @Mitchell Becker:
Hello everyone, I'm looking to connect regarding investment strategies. I am first time real estate investor looking to buy in the west metro. House Hack or BRRR: I am a recent grad still living at home, and am looking to purchase a single family home to move into. I am torn between purchasing a cheaper home that needs rehab, and do the BRRRR method for future properties, or go the house hacking route into something more move in ready for my first property. At the moment I am pre approved for $200,000, and have about $30,000 for a down payment. Taking this into consideration, I would appreciate any advice as to how to approach my first investment. LLC or Individual: I am also looking for any guidance regarding the pros and cons of buying my first property in an LLC, or in my own name. Is there a better option between the two for a first time home buyer? I appreciate any and all guidance, I look forward to connecting!Why not Househack a BRRR?
That's what I did on one of my first purchases.
Bought a fixer-upper that needed a LOT of updating, with 5% down.
- Updated a lot of the house to increase the value while living in it.
- Then got roommates to cover part of the mortgage.
- The increased value allowed me to refinance the mortgage to get rid of PMI, lowering my mortgage payment AND pull some (not all) of my investment out.
- Eventually moved out and rented it out LTR.If you find a serious fixer-upper that isn't even in livable condition, you can use and FHA 203(k) or FNMA Homepath mortgage to include rehab cost in the purchase mortgage.
- Bonus: since not in livable condition, most buyers can't purchase it! So, less competition => lower price!
Logical Property Management4.9460 Reviews - 7moBryon AndrewsBusiness MemberReal Estate Agent · Saint Paul, MN · Member since 2018 · 201 posts · 104 votes
Hey @Mitchell Becker This is a question that a lot of new investors in our market ask. I am not an attorney or CPA and this in not legal or financial advice, but in my experience, it works out best to purchase the first property in your name and utilize owner occupied, low down payment loans. If you purchase in an LLC, you will need to get a commercial loan and it does not sound like you are at that point yet. Many people feel they need to start an LLC for legal protection, but I know investors, including myself, that hold some properties in their personal name and utilize their homeowners insurances stacked with an umbrella policy to help protect them.
As for house hacking, have you considered a duplex? If you are working with the right lender who understands these types of properties, they will be able to explain how you can take a portion of the rent from the other unit that you are not living in and use it as qualifying income which will give you more buying power. This not only gets you into larger assets, but also lowers your cost of living, gives you the opportunity to add value through renovations, learn how to be a landlord and start to scale a rental portfolio.
There are some opportunities in the West Metro, but it may take some searching. If you have any questions or want to know more about our market feel free to reach out.
- 7moAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
as others have said, why not both? With the house hack, you can get a lot more leverage and do a slow brrrr and repeat the process. Many of my clients have found success with this approach in my market (Chicago).
Brick House CPAs53 Reviews - Rental Property Investor · Twin Cities · Member since 2025 · 7 posts · 3 votes6mo
When I first started I house hacked and lived with roommates and purchased in my own name. Depending on where in the Metro you are looking it will be hard to find a turnkey place so anything you buy will most likely need rehab. I would find a good lender that can maybe increase your pre-approved amount. Once you purchase it you can worry about moving it into an LLC.
- 5moAdam TafelBusiness MemberReal Estate Agent · St. Paul, MN · Member since 2017 · 591 posts · 400 votes
Welcome to BP and our local investing community! Having done a handful of house hacks and BRRRR deals myself, I would highly recommend the house hack for your first deal.
Thoughts on BRRRR : Do you have any construction experience or access to incredibly cheap labor? One of those will be needed in order to pull off a BRRRR in today's market. I have 11 years of experience as an investor/agent and have done 3 BRRRR deals total - and I still struggle through making the numbers work on every deal, usually I'm left either a. Keeping 10-30k in the deal OR b. Not seeing a dollar of cashflow until a few years out. It still works for me, but I have the construction experience and risk appetite not found in the typical first time investor. Having said all of that - it's possible, and I'm not saying you can't pull it off, you just need the right team around you and your expectations need to be right-sized.
Househacking : My first 2 house hacks were actually SF deals, but if I could go back in time I would have bought larger 2-4 unit properties. This is your time to access cheap leverage (from a cash-needed perspective and a cost-of-borrowing perspective), and you'll qualify for a larger purchase if you use the potential or actual rental income against your DTI. If you go SF, would you be open to having roommates? I house-hacked a SF home when I was younger and filled every room with either a friend or Airbnb guest - and it worked out great. Make sure you learn to correctly underwrite the deals, buy in a location you are familiar with, and keep an open mind when it comes to property type.
I think you could also pull-off a hybrid of the two. Use a low downpayment loan to purchase a house hack deal, but find a place which needs substantial work. The deals which are BRRRRable immediately are pretty distressed (you need to buy incredibly cheap in order to have an instant margin at a 70/30 LTV) and they won't pass conventional appraisal condition standards. You can still find a place in need of major cosmetic upgrades for a discount - have you agent run a current AND ARV CMAs on the deal, and you might be able to position yourself for a cash out after a few years. Keep in mind, the LTV on the cash out will not be as sweet as the purchase, which is why you will need to be patient. The market will have to do some of the lifting for you, perhaps cashing out after 3 or 4 years could happen.
Not legal advice, just a Realtor here… If you buy as a house hacker you cannot purchase in an LLC. You could quit claim into an LLC down the road, but look into the cons of this before doing it, consult with an attorney. Don't overthink this step, it's the least of your concerns. Focus on finding the best deal you can in the best area with data which supports a nice ARV margin.
Hope this helps!
Upside Property Sales 4.9108 Reviews - 5moJose OrtizBusiness MemberAccountant · South Florida · Member since 2026 · 47 posts · 18 votes
Mitchell...
I’ll just add a tax perspective here to give you a little more context alongside the investing side.
On house hack vs. BRRRR - from a tax standpoint, there's honestly not a huge difference early on. In both cases, if the property is a rental, the losses are usually passive, which means they often don't reduce your taxes right away- they just carry forward.
Where house hacking does stand out is on the back end. If you live in the property for 2 out of 5 years, you may be able to exclude a big chunk of the gain when you sell. For a first deal, that flexibility can be really valuable.
On the LLC vs. personal name question:
Most first-time buyers go in their personal name, mainly because financing is easier and cheaper. From a tax perspective, there’s usually no real difference anyway - single-member LLCs are treated the same as owning it personally.
LLCs are more about liability and structure, not really tax savings. You can always revisit that later once you have more properties.
So if I had to simplify it....
Don’t stress too much about optimizing taxes on deal #1. Focus on getting a solid property and executing well. The tax benefits will come over time - but they’re usually not the deciding factor on your first move.
I hope that you found this valaubale.
The Scale Collective.56 Reviews
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