What happens after the first year?

2 Replies

I'm in my education phase right now and I've determined that I want to start out with an FHA house hack (hopefully a 4 plex). I also have the VA loan available to me. My biggest question now is: After I've lived in the house for a year, how do I use that property to get my next one? I can't believe that there will be equity in it as far as what I've paid on the principle, so is the idea that I'd make improvements to the place throughout that year with the rent (even though I think I should do it before I rent it out, right?), or just save any cash flow I might have to save up for a down payment on property #2? In that case, I'll have to make sure that I have a lot of cash flow to save up in one year so it seems like I'd have to find a really really good deal because of the PMI.

Maybe I'm just really confused as to how this is supposed to work out. My plan is to get an FHA loan to house hack for a year, move out and refi to a non-owner occupied loan, then do it again for the next year with my VA loan and maybe one more year after that. I'm sure there are a lot of things I don't understand about this so any light shed on this would be very helpful. I didn't really find any posts about this.

I'm also not sure how much money I should plan on having on hand for initial rehab costs.

Thank you for your time.

You could buy a multiple with your va loan, live in one and the others rent out so that you are living for free. Take all the money you can and save for the second home for the year you are in the VA home. Then, use the savings you have accumulated and get another loan maybe through the VA or through a normal FHA loan. Live in it for a year same as above making sure that the rents you get from this house also pays the mortgage so you can save more money again for the next home. . Now your first house should have more rent coming in and you will then use that for your savings for the next one. At some point there should be equity that you can use from the rentals to keep adding more.

Its is not a sprint it is a marathon.  Move quickly but do not outpace yourself. 

Good Luck!

Thank you Michele, I appreciate your response. I was planning on buying one property a year for the first three years using my FHA and VA loans and then kicking it up a notch after that. I just really want to be sure that I'll be able to buy my second property after that first year and not have to wait longer than that to save up for a down payment.