Wholesaler · Enfield, CT · Member since 2016 · 47 posts · 13 votes
In my case, Im looking to house hack, looking for a multi-family, that needs some work, rehab whatever needs work (the rental first, to get that income flowing asap, and then obviously ours over time. My question is, how would one attack this if I get this at a decent price, BRRRR it even though my family and I need to live in it for a year or so, (this will be our first home purchase) , or just analyse it as a rental property, or as a flip? Since I need live their for a year, what would be the smartest strategy for my first investment?
It seems like you already have most of the pieces in place in your mind.
1. Find a property that needs some rehab, and buy it for a good price (ideally for BRRRR, you need to pay 70% of ARV - rehab costs).
2. It's smart to rehab one side as quickly as possible and rent that out- this will help your financial position immediately.
3. It won't be fun living in a construction zone while you rehab your side. Not something I am up for, personally, but people do it and survive.
4. After you rehab both sides, have the property re-appraised and refinance so you can pull cash out and move on to your next property.
5. If you will keep this as a rental, you should analyze it as an investment. If you plan to sell after rehabbing both sides, analyze as a flip. Personally, I would advise to try and keep it as an investment and use the cash you pull out at refinance to buy your next property.
6. I read on a blog post on BP that if the property is a duplex, you can actually use part of the expected rent from the other unit as income to help you qualify for the loan (this does not apply to triplexes or quadplexes, apparently). This is a fantastic opportunity to qualify for a higher loan amount than you would based on your income alone- it may enable you to buy a bigger duplex, in a nicer location, or whatever. However, you should obviously still buy below market to maximize your built-in equity as refi.