I'm trying to get some feedback regarding what my next real estate move should be. 3 years ago, we househacked a condo that we now rent out and about 1.5 years ago we househacked a 2 family that we currently live in. We successfully added value (about 30% to the condo and about 25% to the house) to each property, but we used up much of our funds to complete the rehabs and already refinanced our house (which now has 13% equity). Currently we don't have a lot of cash in the bank, however our DTI is reasonable (mid-30%'s) and we have good credit (high 700's). I'm anxious to get my feet back in the game, but not sure where to start without much of a down payment or cash reserves available. We've considered flipping, but are a little wary of the rates and fees for HML, and are willing to engage in another house hack, but not sure we'll be able to get a mortgage. Any suggestions? Maybe a 203k house?
Read my blog post on HML being your friend not your enemy and the myths associated with HML and see if it changes your mind. If you monetize the costs associated with moving to another house-hack (setting aside the PITA factor), HML is not your enemy. Using HML resources to leverage your investing ability makes you a better investor if you let it. It forces you to really sharpen your pencil and look for and/or create RE transactions that make the most sense from a financially sound point of view. It's also a lot easier to obtain than conventional funds are...and far less headache than a 203k loan would be...AND you don't have to move.
Hi @Charlie Fitzgerald , thanks for the tip, I'll definitely check out the article. I understand what you mean about it paying for itself, I just get worried that with overages (our last reno, the budget doubled) that the fees/interest would eat into the profit too much.
Good morning @Laura Levine ,
Which is precisely why I say that using HML "forces you to really sharpen your pencil and look for and/or create RE transactions that make the most sense from a financially sound point of view." You need to be getting your numbers right on plus or minus an "oh hell...who would of thought that would happen factor" of 5-10% depending on the scope of the job. It won't take too many hits to your profit margins for you to figure out what you are doing wrong.