So I have been weighing the options on what the best strategy is for my current situation and would love any advice that I could get. I've been going back and forth considering househacking a 4plex with an FHA, or doing a live-in BRRRR (unsure of financing.)
My wife and I have a 6 month old daughter and perhaps will have a 2nd child by the time we are ready to close on a deal. We're aiming to save $10,000 in cash by the end of the year and have some credit building (and of course learning) to do in the mean time. We live in central-IL and are targeting a couple of college towns for our first purchase.
I've been leaning heavily towards doing a househack, but am not sure that we would be able to find an ideal situation for a family - living so close to our tenants/neighbors. Using a property manager could perhaps help with that. Positives I see are eliminating living expenses and perhaps gaining some immediate cash flow.
Considering our family situation drives me to seriously consider a live-in BRRRR. However, it sounds to me that BRRRR requires a hard-money lender or straight cash to start - and I don't foresee having enough credibility with a hard-money lender, and of course don't have the cash to start. Is it possible to purchase a BRRRR with a 203k loan, then refinance afterwards? (Does this even sound feasible to find such a deal, refi/switch to 80% LTV and still come out of it with cash in hand?)
Any advice is appreciated, especially if I am misunderstanding anything! What's on the back of mind in considering each strategy is of course how efficiently we can take the steps to eventually purchase our 2nd deal. Thank you for the help
@Brian Engstrom Congrats on the growing family! I am single and house hacking a 4-plex. Each unit is 800sq ft. It works for me and my cat but its def close quarters with the neighboors. Idn if I would do it if I had a family (I COULD do it, but if I had the choice, I might consider something else).
Instead of doing a live-in BRRRR, why don't you do a live-in flip? You would be able to take out a FHA loan (or my sugessestion would be find a credit union/bank that has a loan product that allows you to put 3-5% down with NO PMI. For example on my first house, I did a 15/15 ARM, 3.5% down...becuase sold it before 15years, I never had to deal with the adjustable rate part. (Or I could have refied before 15 years).
With a live-in flip, you could just find an ugly/out-dated house (which would work with a conventional loan). After it's fixed up, you can Refi or sell in 2 years for a profit (and not have to pay capital gains).
Even better if you could find a place with a livable basement/in-law suite/attic and rent it out or Airbnb. (If your city allows Airbnb could be very profitable. My SFH Airbnb cash flows 2.5x more than if I were to rent it out).
@Justine Scheuher, you've given me a lot to explore. If I were to get a local loan for 3.5% down, would it be normal for them to require 1 year living in the property? I had never considering getting an ARM and then avoiding the rate change ahead of time.
What kind of guests do you aim for with your AirBnb? We have State Farm HQ nearby so I'm thinking those travelling for business would be our target if we went that route. I find it interesting to consider how we could stage their stay according to their needs. Thank you for the helpful response!