What should I do after I sell my house?

5 Replies

I bought my house a little over 4 years ago, and have been remodeling it while also living in it. I am ready to sell it now and should net about $35,000 after the sale and other expenses (closing, real estate commission, paying off a.c. unit, etc). I want to use that money for a downpayment on a rental property and another house for me to live in. 

The idea would be to sell my house, put 3.5% down on another house, use the cash from the sale of my house to put 20% down on a move-in ready rental property. 

For the house I would be living in, I'm thinking about buying a 3 to 4 bedroom house in a trendy neighborhood and house hacking by renting out rooms to cover my mortgage. Ideally, I would find a house where the rent from the rooms would produce positive cash flow after making my mortgage payment. I would also be using the cash flow from the rental to pay other expenses I have. The houses I'm looking at living in are older houses that have been completely renovated. I do not want live in another remodel project again if I don't have to. 

Does anyone have experience with this? Any glaring errors in my plan that I might be blind to? Any advice would be greatly appreciated. I'm new to all of this and have been struggling with my options. 

The only thing that immediately comes to mind is think about your debt to income and if you can acquire both in an acceptable range for your lender. Also, for a non-owner occupied you may have to bring 25% to the table for the investment property. 

If you're up for it, buy the next home as owner-occupied, low down loan where you want to invest, plan to live in it at least a year, rent it out, (even better if it's a 2-4 unit where you live in one and rent the others), then buy your next owner-occupied where you actually want to live a year later.  A year more of your life and you've got a great low-down start on investment property.    

You would be financially farther ahead if you invest the money in a multi unit and live in one unit for a year. You get the benefit of a owner occupy home and can do it as many times as you desire to grow your investments.

  Buying a personal home is a bad idea if you want to continue investing. Stay away from the liability and high cost of maintaining a home until you have money to throw away.

Originally posted by @Lynn M. :

If you're up for it, buy the next home as owner-occupied, low down loan where you want to invest, plan to live in it at least a year, rent it out, (even better if it's a 2-4 unit where you live in one and rent the others), then buy your next owner-occupied where you actually want to live a year later.  A year more of your life and you've got a great low-down start on investment property.    

Thank you for the response. I have been looking at buying a duplex and living in it and renting out the other unit like you mentioned. What is the rationale behind living in it for one year? Is that the minimum amount of time I would need to live in it before qualifying to purchase another owner-occupied property? 

@Matthew Jones it is usually the minimum length of time you need to sign at closing stating you will live in the home as an owner occupant in order to get the lower down-payment owner-occupied loan terms.   It's to minimize those taking out primary residence loans with lower-down options and easier qualifications, then moving out months later, flipping or turning them into rentals.  

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