Living with parents: BRRRR or House Hack in expensive market

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Living with parents: BRRRR or House Hack in expensive market

Justin Yen
Member since 2020 · 5 posts · 1 vote

Hello BP!

Due to Corona and my wife’s surgery—we’re currently living with my family in the NJ/NYC area where cost of living is high so we’re able to save in rent. Currently we only have 50-60K saved up.

We've been dying to get into real-estate. And I'm about half way through the BRRRR strategy book. Motivated by the most recent Q&A podcast, my question is should we save up cash for a BRRRR deal on a multi family or should we house hack using an FHA?

Using an FHA on a two family will still run me (mortgage+taxes) 3-4K a month or so—so even renting out the other unit will not cover the mortgage. Unless I can get like a 3 family for that price.

BRRRRing on a multi family and then living in it while renting it out sounds ideal, but again we don’t have the capital to make a cash offer and fund the rehab.

Hoping to take some action soon!

Thanks for your thoughts!

Justin

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  • Dan M.
    Real Estate Investor · Unadilla NY · Member since 2017 · 418 posts · 297 votes
    6y

    Do you have a deal in mind you would like to share? Either option is fine and is a great way to get started investing. The great investor, Thach Nguyen, lived with his parents until he had twelve rental properties under his belt. I think ultimately it depends on the deal and what you want to do with your lifestyle. Delayed gratification can yield fantastic results but the trick is to get started one way or the other. 

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  • Justin Yen
    OP
    Member since 2020 · 5 posts · 1 vote
    6y

    @Dan M.

    FHA/House Hack

    https://www.zillow.com/homedetails/496-Burton-Ave-Hasbrouck-Heights-NJ-07604/55451141_zpid/

    2 family. Listed 375k. 3 separate lots, 5% down at 3.5% is a mortgage of $1600/month + 18k taxes a year for all three lots.

    Has potential since it has the other lots. Will need landscaping work and interior work. I don’t know too many details about roof, hvac, plumbing etc., I haven’t driven the area yet.

    I will post a BRRRR deal once I analyze one that I think has potential.

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  • Justin Yen
    OP
    Member since 2020 · 5 posts · 1 vote
    6y

    @Dan M.

    One of the things that's hard about this for BRRRR deals is that a lot of foreclosures in a livable area are listed for almost the same in like 300-400k range. I don't really know how to look for a BRRRR like this.

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  • Dan M.
    Real Estate Investor · Unadilla NY · Member since 2017 · 418 posts · 297 votes
    6y

    @Justin Yen Yeah it can be tough if you live in an expensive market especially if your budget is only 50-60k but do not be discouraged money isn't everything you can find hard money lenders to help you purchase just make sure theres enough meat on the bone of the deal so you can actually appraise at a bank when you pull the money out, and you don't over spend on the rehab itself otherwise you could find yourself in trouble losing the home to the hard money lender if you can't complete the work.  Maybe start in an area where property values are not as expensive this way there is less risk of not completing the project or losing your money and you can gain valuable experience this way. 

    On the other side of the coin if your confident in house hacking as opposed to BRRRR and it pays the bills and you live for free/possibly cash flow thats a nice win there so you can continue to save up for those larger properties. Infact since this would be your primary residence you could sell it tax free on the gains if you live there long enough * disclaimer -talk to a qualified tax professional*

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  • Justin Yen
    OP
    Member since 2020 · 5 posts · 1 vote
    6y

    @Dan M.

    Okay! Thanks Dan! Will continue to update when I start making moves! Appreciate your time!

    1Reply
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