Trying to escape the analysis paralysis

8 Replies

So I am oh so close to moving on my first deal which will be a multifamily house hack.  And as excited as I am about it, I feel like I have to do 1000 things first and that thought is keeping me from moving forward.  I thought I would write out the steps I've completed and what I see as barriers in hopes of some feedback on how to prioritize my next move.

Current living situation.

Working on getting my house ready to sell.  Based on comps i should be able to sell for $160k, currently owe $100k.  My plan is to use the money made on the house as a down payment on an fha loan and repairs on a property.

I am currently finishing up a remodel on my house.  I'm doing all of the work myself so it is taking some time to finish it.  Things that are left is flooring in kitchen (some kind of vynal, tile won't work, long story), putting new trim up (all trim is removed), and having a pre inspection to find any thing that my hold up a sale.

I am in talks with a bank that works with a lot of investors and found a loan officer that invests hikmself.  I have not filled out a loan application yet.  I also have an agent that works almost exclusivly with investors that is helping me get my house sold and into a new property.

I guess I'm stuck on where do I go next? Do I go ahead and get approved for a loan and start making offers on properties? I have a heloc for $30k that I haven't touched so I could use that.  Or do I focus on finishing my house and get it on the market and then find a duplex?  I feel good that my house will sell fast, I'm in a fairly hot market and the house next door sold last week in a day for the price per sqft that I'm going to ask and it's not been remodeled at all.

I'm also just worried about selling my house and then not able to find a property in this market thast will cash flow.  There's definitely not much if anything on the mls in the area that would cash flow.

Any thoughts or suggestions is very much appreciated!

Congrats! It looks like you have already started moving on your goal! Here are a questions/thoughts I would focus on. 

-Is there somewhere you can stay if you don't find that duplex deal yet? Family, friends,etc.  I know it isn't ideal, but you don't want to take a bad deal just because of feeling rushed. Can you place some things in storage in the meantime? Selling and buying a home takes time.

-Ask your agent for a net out sheet that will give you a good idea of how much money you will actually net out of the deal. There are lots of fees and agent commissions that will come out of your profit, maybe even taxes.

-A house hack may not cashflow right away with you living in it, so keep that in mind. My gf and I own a duplex we just house hacked as a way to increase income. The mortgage is $1280 with an FHA Loan, 3.5%. We purchased for 190k. We renovated both sides and just rented out the bigger side for $1500 a month. With utilities also being covered by the rent, we are not cashflowing, but living for free! When we move out, we will cashflow about $1500 a month.

-Can you lower any other monthly debts? Always a great idea.

You may have already thought of some of these. You seem very prepared and I would say you are not having analysis paralysis. You're making moves! Keep it up and it will start to snowball!

Originally posted by @John Clark :

So I am oh so close to moving on my first deal which will be a multifamily house hack.  And as excited as I am about it, I feel like I have to do 1000 things first and that thought is keeping me from moving forward.  I thought I would write out the steps I've completed and what I see as barriers in hopes of some feedback on how to prioritize my next move.

Current living situation.

Working on getting my house ready to sell.  Based on comps i should be able to sell for $160k, currently owe $100k.  My plan is to use the money made on the house as a down payment on an fha loan and repairs on a property.

I am currently finishing up a remodel on my house.  I'm doing all of the work myself so it is taking some time to finish it.  Things that are left is flooring in kitchen (some kind of vynal, tile won't work, long story), putting new trim up (all trim is removed), and having a pre inspection to find any thing that my hold up a sale.

I am in talks with a bank that works with a lot of investors and found a loan officer that invests hikmself.  I have not filled out a loan application yet.  I also have an agent that works almost exclusivly with investors that is helping me get my house sold and into a new property.

I guess I'm stuck on where do I go next? Do I go ahead and get approved for a loan and start making offers on properties? I have a heloc for $30k that I haven't touched so I could use that.  Or do I focus on finishing my house and get it on the market and then find a duplex?  I feel good that my house will sell fast, I'm in a fairly hot market and the house next door sold last week in a day for the price per sqft that I'm going to ask and it's not been remodeled at all.

I'm also just worried about selling my house and then not able to find a property in this market thast will cash flow.  There's definitely not much if anything on the mls in the area that would cash flow.

Any thoughts or suggestions is very much appreciated!

You could get a larger HELOC line, some banks do up to 90% of your equity, which you can use for down payment on a prospective duplex. How much is your mortgage on primary residence ? Do you think that if you rent it out instead of selling you will cash flow? So you will have HELOC around 50k ready when you find duplex, no need to sell. And after you buy and move into your duplex you can rent out the current primary. If your residence is in great school district, you should have no problem to rent it out. You do need to analyze all the numbers to make sure you wouldn't have negative cash flow .

Just the thought

Originally posted by @Diego Ortega :

Congrats! It looks like you have already started moving on your goal! Here are a questions/thoughts I would focus on. 

-Is there somewhere you can stay if you don't find that duplex deal yet? Family, friends,etc.  I know it isn't ideal, but you don't want to take a bad deal just because of feeling rushed. Can you place some things in storage in the meantime? Selling and buying a home takes time.

-Ask your agent for a net out sheet that will give you a good idea of how much money you will actually net out of the deal. There are lots of fees and agent commissions that will come out of your profit, maybe even taxes.

-A house hack may not cashflow right away with you living in it, so keep that in mind. My gf and I own a duplex we just house hacked as a way to increase income. The mortgage is $1280 with an FHA Loan, 3.5%. We purchased for 190k. We renovated both sides and just rented out the bigger side for $1500 a month. With utilities also being covered by the rent, we are not cashflowing, but living for free! When we move out, we will cashflow about $1500 a month.

-Can you lower any other monthly debts? Always a great idea.

You may have already thought of some of these. You seem very prepared and I would say you are not having analysis paralysis. You're making moves! Keep it up and it will start to snowball!

I do have the option of staying with my girlfriend if I do sell fast and can't find a place immediately.   there are several factors though that still makes that a temporary thing.

Just out of curiosity, how did you find your duplex?

All of my debts with exception my my mortgage are gone! I made that commitment early this year and made it happen this summer when I got rid of my expensive car payment for a paid off car.

Yeah I don't think it's actually analysis paralysis, just more nervous the closer it gets to reality lol

Originally posted by @Lana Lee

You could get a larger HELOC line, some banks do up to 90% of your equity, which you can use for down payment on a prospective duplex. How much is your mortgage on primary residence ? Do you think that if you rent it out instead of selling you will cash flow? So you will have HELOC around 50k ready when you find duplex, no need to sell. And after you buy and move into your duplex you can rent out the current primary. If your residence is in great school district, you should have no problem to rent it out. You do need to analyze all the numbers to make sure you wouldn't have negative cash flow .

Just the thought

so the HELOC I got is based off an assessment that was pretty close to what I should be able to get for my house now. However I did talk to my lender to day and they said since the HELOC is with a different bank, I should have no problem using it as a down payment with FHA (apparently FHA has a weird thing about using loan money for down payment that comes from the same bank providing the mortgage).

I have looked into renting my house out and based on my monthly payments of $875 and the fact that I could probably only get around $1100-$1200, it just wouldn't cash flow at the end of the day.  or at least not enough to make sense.  Renting it out could be an exit strategy if I can't get it sold quick enough or decide to get a duplex first.

Originally posted by @John Clark :
Originally posted by @Diego Ortega:

Congrats! It looks like you have already started moving on your goal! Here are a questions/thoughts I would focus on. 

-Is there somewhere you can stay if you don't find that duplex deal yet? Family, friends,etc.  I know it isn't ideal, but you don't want to take a bad deal just because of feeling rushed. Can you place some things in storage in the meantime? Selling and buying a home takes time.

-Ask your agent for a net out sheet that will give you a good idea of how much money you will actually net out of the deal. There are lots of fees and agent commissions that will come out of your profit, maybe even taxes.

-A house hack may not cashflow right away with you living in it, so keep that in mind. My gf and I own a duplex we just house hacked as a way to increase income. The mortgage is $1280 with an FHA Loan, 3.5%. We purchased for 190k. We renovated both sides and just rented out the bigger side for $1500 a month. With utilities also being covered by the rent, we are not cashflowing, but living for free! When we move out, we will cashflow about $1500 a month.

-Can you lower any other monthly debts? Always a great idea.

You may have already thought of some of these. You seem very prepared and I would say you are not having analysis paralysis. You're making moves! Keep it up and it will start to snowball!

I do have the option of staying with my girlfriend if I do sell fast and can't find a place immediately.   there are several factors though that still makes that a temporary thing.

Just out of curiosity, how did you find your duplex?

All of my debts with exception my my mortgage are gone! I made that commitment early this year and made it happen this summer when I got rid of my expensive car payment for a paid off car.

Yeah I don't think it's actually analysis paralysis, just more nervous the closer it gets to reality lol

Nerves are normal. There's a reason everyone doesn't do this, but almost everyone wishes they could or would have.

Make the jump now and never look back. The only regret I have is I wish I would have started sooner. 

BTW, this is addicting lol.

Why are you selling your current house @John Clark ? If you rented it, post remodel, does it cash flow? If so, then take the HELOC and acquire your house hack Multi-family. Chances are your multifamily will be occupied and you'll need a runway before moving in, stay at your current place until then.

Best of luck on your search. 

@Jay Helms that was my original plan but based on rents in my neighborhood i just don't think it would cash flow. mortgage is 875 and rents are around 1100. I'm considering going ahead and using the HELOC to buy a place and then sell the house. I feel good that my house will sell quick, and if not I can rent it out as a back up plan.

@John Clark

We used the same agent that I had used to do my first house flip, but I explained that I intended to house hack and that helped her understand what to look for in the areas I mentioned. We found a property in not that nice of an area with a troubled tenant, but we got to meet the owner and real estate partner. Turns out they had a few more properties they were selling because one of them wanted out. They didn't put much money into the properties and got whoever in there, which led to headaches. We worked out the numbers on one that was more like two condos stuck together to make sure we would enjoy living there as well and got to work. We redid a lot, but were able to increase rents really well. 

One thing I would make sure to do when you find a place, ask that one unit be empty at closing for you to move into. And also ask about the current tenant on the otherside if there is one. You will inherit them for the rest of their lease if they are on one.

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