Live-In Rehab... Pros and Cons???

3 Replies

We are considering a live-in rehab in Albany NY (preferably a single-family home) for a buy and rent in the future (1 to 2 years).

Does anyone have experience with this? Looking for the ups and downs on this approach, especially financing, project management and future refinance options.

Appreciate your time to help these newbies.

Matt and Kate

Hey @Matt Lengel !  In my experience if you are wanting to hold the home as a rental for the long term future, then living in it while you renovate it has one main benefit (low down payment) and a litany of pain-points (like dusty EVERYWHERE, cash out of pocket for rehab, and a whole lot more).

Typically when investors think through the "live-in" angle it is either to optimize the down payment (as in a house-hack, where you'd ideally bring little to closing and have a higher cash-on-cash return) or to optimize the tax scenario (as in a live-in flip, where the goal may be to live in it for two years and then sell it within the next few years, triggering the "tax free capital gains on the first $250k of profit idea). 

That said, unless you see some angle that makes a live-in rehab of a long-term rental especially efficient, I would say it's a recipe for more stress than is needed for less return than is reasonable.

@Will Fraser thank you for your words. You have some great points.

Currently, we pay for an apartment so that money goes out and does nothing but pay the rent.

We do like the house-hack benefits, especially since they get us into a property sooner. While we would be paying for our own equity initially, we are thinking it's a better deal (mortgage lower than the rent, lower entry cash required) at this point.

We are still analyzing this option and your comment is helping us!

Hey @Matt Lengel I would echo some of the points that Will made. A live in rehab of any kind can be a tricky situation. If you're looking in Albany, NY our inventory here is perfect for a house hack since there are many great B-B+ two family properties. A little bit less so for "live in" rehabs due to limited inventory. Please feel free to message me if you have any market specific questions!