Need advice on how to purchase my first multifamily

5 Replies

Hi everyone. I am looking at purchasing my first multifamily property and am not sure how to go about doing it. This is my situation. Any help would be great appreciated.

I have been in my current residence for almost 4 years. I used an fha loan to get it. I was told that I can refinance my current house and then purchase a multifamily property. If I house hack it, then it would save me from putting down 20-25%.
My question- is this possible? And if so, would this be the best way to go about doing this?

@Jason P. - you will probably get a wide range of ideas and suggestions. I am a big fan of house hacking the multi as you will need less cash down. 

So, here is my thoughts. First, analyze your current property. Does it make sense to have it as a rental property? Maybe the numbers make sense or maybe they don't. If they don't make sense, maybe you sell and use that cash towards investing. If your current property makes sense to be a rental, then move out and rent the house. If you have good financing in place, no need to spend the money refinancing.  

Then, while you are renting a place, living with a friend or family, go find that multi-family property. Make sure it makes sense as a rental, make your offer, and get owner occupying/primary residence financing. Live in one unit, rent the rest. The really good scenario is if you can combine a BRRRR and a house hack. An example would be if you got a duplex that needed work, live in one half and fix it up. Then when the other unit becomes empty, move into that unit, rent the renovated unit at the new higher rent, then work on the second unit while you live in it. Then move out and rent the second unit at the new higher rent.

Good luck!

Thanks for the advice. If I wanted to keep my current house (not rent it out or anything), do you think that would be possible? Which is why I thought about refinancing. I will have about 20k for closing cost and down payment.

@Jason P. Why would you not rent out your current house if you were to refinance your loan and move out? Keeping it but leaving it vacant is just about the worst thing you can do. At that point you would just be throwing away money; I'm not sure what your current house could rent for, but you could easily be throwing away $15,000+ a year if you don't rent it out. If you would like to keep it, refinance it to a non-fha loan (you have enough equity to do that, right?), purchase and move into a small multifamily unit using an fha loan, and rent out your refinanced house.

House hacking a small multifamily in and of itself is a brilliant idea, and I encourage you to pursue that endeavor. However, try not to let your excitement to house hack cause you to leave money on the table.

Best of luck!

I live in a small town & the property that I would like to purchase is in a college town 45 minutes from where I live. I would like to keep my house and stay there on weekends when I am not at work. There isn’t much of a rental market where I live. I would end up occupying the rental for the amount of time stated in the agreement from the lender, then move back to my house when that time frame is done. Plus my mortgage on my house is only $386 a month including taxes & insurance.