Hi BP family!
My wife and I own a home in Vancouver, WA where there is huge demand for homes and low inventory and the markets really hot for selling. Most homes are going for well over asking and waving inspection.
We are feeling torn between selling our home and keeping it as a rental. If we sell it now after closing costs we should walk away with anywhere from $130,000 to 160,000 depending on sales price and closing costs. We put $60,000 down and have about $20,000 in repairs into it. We would take our money and look for a a duplex, triplex or four unit multi family we could brrrr.
If we keep the house as a rental we If we keep our house and rent it out the mortgage is $1390 and the average rent in our area for the same type of home of $1950. We would probably need to put at least $3500 into it now to redo the plumbing. We think it would cash flow $350/month.
We don't have cash and we want to keep investing so we would take out a HELOC but we would likely only qualify for 60-80k maybe 100k if we pay $700-800 for an in home appraisal and go with a higher rate around 4.5 variable to get 90% LTV.
Our goal is to have rentals and it seems unwise to walk away from a cash flowing rental but also it seems like if we can capitalize on all the equity and the market being so hot maybe we can take the money we walk away with and find more doors with higher cash flow and be able to invest at a faster rate.
Hey @Paris Shewey , you have a fun little problem there. While $350/mo in cash flow is a good amount, in our market you will create a lot more wealth in appreciation (like your home did). I would encourage you to take that next step into multi-family. They tend to cash flow better and there is solid rental appreciation.
If you sell your home, are you planning on living in the multi-famil and house hacking? That could be a good way to go and you could possibly get 2 duplexes that way. Just know that the less you put down, the longer it takes to refinance since they will require you to keep 20% equity in the property.
@Paris Shewey I have no idea how you calculate 'cash flow'. Are you including full allowance for vacancy, maintenance, capex etc? My suggestion would be to proceed with your MF plan and sell the existing property.
Also keep some cash on hand to deal with potential issues that may arise with your new investment, as you build up reserves. All the best!
Thank you Brad and Bjorn!
Yes if we sell we would most likely house hack the multifam. We would only buy once we find one at a discount ideally following the 70% rule so that could gain substantial equity from being renovated and refinance sooner.
I just used a calculator to find our cash flow amount. It might not be totally accurate but should be fairly close.
Am I crazy to think it would be possible with a heloc as down payment for a hard money loan to keep our current home AND buy a duplex that we can rehab rent and then refinance all while living in our current home? Am I seeing it right that the biggest challenges will likely be finding a deal that’s within the 70% rule given the market competition and then making sure we can refinance and pay off the hard money and heloc?
We have 3 small kids so if it’s possible to avoid house hacking and moving a ton that would be our ideal.
I cannot speak on your market. However, I bought my first home back in 2015 in CA, had to move out for a new job move, so rented it out. Could have sold for some solid gains, but still kept until now.
In short, I’m a long term buy and hold investor, so I rack up my home purchases, save next 20% and then repeated. For me, i would just buy your next home and rent this one out. I know lots of folks here are brrr fans, but I have demanding job, so try to keep it simple for myself.