Suggestions to house hack
Investor · Member since 2021 · 53 posts · 25 votes
Suggestions to house hack
Most Popular Reply
Real Estate Agent · Member since 2018 · 459 posts · 414 votes
3yQuote from @Courtney Mccrear:
Hey how’s it going everyone? Could someone please give me some advice?
So I'm trying to scale up and acquire more doors, I have 2 rentals I've acquired through tax deeds already but I'm currently stuck trying to get to 3. I'm ran into a hiccup in my current primary home! I used my Va loan to acquire this home with hopes to BRRR after this year, I refinanced and started on the rehab but got ahold of a bad contractor (all my fault) and he beat me out of 35k. I have about 50k in equity but I can't tap into it because of my dti ratio on my credit is too high. The downstairs is basically unfinished because of the contractor, but at this point I don't mind selling my primary or doing a lease option. I would like to sell my primary home and acquire a multifamily to house hack.
Any suggestions?
You cannot 1031 a home that you are occupying. Please check with your tax and legal professional.
If you decide to sell, that opens up your VA to purchase a 1-4 unit and start your house hack. You may find difficulty selling with an unfinished downstairs. It may not be considered financeable; that diminishes your buying pull to investors or cash buyers willing to take on a project. But I understand where you are coming from. We sold our first home to get into a 4plex. We had about $40k in equity but $10,500 was tied up as a 2nd lien from a down payment assistance grant and we couldn't refinance our equity because there wasn't enough and couldn't get a HELOC because the 2nd lien position was taken. So selling was our best option.
If you've lived there for 2 of the most recent 5 years, you can defer on your capital gain taxes you'd experience (again, speak with your tax and legal advisors). If you're able to finish the downstairs on your own, that'll be the best way to maximize your profit and then use that to purchase your house hack! That's what we did. Best of luck! Hope that helps. Not a bad strategy at all :)
8 Replies
- Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes3y
Quote from @Courtney Mccrear:
Hey how’s it going everyone? Could someone please give me some advice?
So I'm trying to scale up and acquire more doors, I have 2 rentals I've acquired through tax deeds already but I'm currently stuck trying to get to 3. I'm ran into a hiccup in my current primary home! I used my Va loan to acquire this home with hopes to BRRR after this year, I refinanced and started on the rehab but got ahold of a bad contractor (all my fault) and he beat me out of 35k. I have about 50k in equity but I can't tap into it because of my dti ratio on my credit is too high. The downstairs is basically unfinished because of the contractor, but at this point I don't mind selling my primary or doing a lease option. I would like to sell my primary home and acquire a multifamily to house hack.
Any suggestions?
Have you run the numbers on how much you could sell your primary address for? If the numbers make sense and you can 1031 then I think that would be worth it. You could also ask people in your network to invest with you to be able to get it finished so you can refinance. I will give my private lenders 12% -15% to start to build that relationship.
- Investor · Member since 2021 · 53 posts · 25 votes3y
Arv is about 330-40k in repairs so roughly about 290ish market value. I owe 250. That’ll be fine id love to reach out to them for advice
- Real Estate Agent · Roswell, GA · Member since 2023 · 19 posts · 13 votes3y
Hi Courtney,
What area is your primary located? I'm a Realtor and Investor in the Atlanta area. I would love to give you an accurate property analysis and talk about options. Feel free to reach out!
- 3yAlfath AhmedBusiness MemberReal Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
Quote from @Courtney Mccrear:
Hey how’s it going everyone? Could someone please give me some advice?
So I'm trying to scale up and acquire more doors, I have 2 rentals I've acquired through tax deeds already but I'm currently stuck trying to get to 3. I'm ran into a hiccup in my current primary home! I used my Va loan to acquire this home with hopes to BRRR after this year, I refinanced and started on the rehab but got ahold of a bad contractor (all my fault) and he beat me out of 35k. I have about 50k in equity but I can't tap into it because of my dti ratio on my credit is too high. The downstairs is basically unfinished because of the contractor, but at this point I don't mind selling my primary or doing a lease option. I would like to sell my primary home and acquire a multifamily to house hack.
Any suggestions?
Has it been a year since you first house-hacked? You might be able to do it again. Otherwise, I would look into 1031 this property. Generally for house-hack's, I only buy properties in A-class areas that I can get under-market value.
If your market does not allow for this, I would look out-of-state.
ReafCo | Ahmed Group 530 Reviews - Investor · Member since 2021 · 53 posts · 25 votes3y
It’s an A property for sure just an older build. 3 levels the bottom level is unfinished so it’s not suitable to house hack at the moment. I’m extremely grateful for your advice!
- Real Estate Agent · Member since 2019 · 143 posts · 74 votes3y
I'm sorry to hear about the setback you faced with the bad contractor. That can be a frustrating experience. It's great that you're thinking of creative ways to move forward and reach your goal of acquiring more rental properties.
Selling your primary home and acquiring a multifamily property for house hacking is definitely a great strategy. One option to consider is doing a lease option on your primary home. This would allow you to potentially get some cash flow from renting out your home while still having the option to sell it in the future. With the cash flow, you may be able to lower your DTI ratio and increase your chances of being able to acquire the multifamily property you're interested in.
Another option to consider is finding a private lender or a partner who can help you finance the purchase of the multifamily property. You could also explore the option of refinancing your primary home with a different lender who may have more flexible DTI requirements.
Overall, it's important to stay positive and keep exploring different options until you find a solution that works for you. Good luck on your journey towards acquiring more doors!
- Real Estate Agent · Member since 2018 · 459 posts · 414 votes3y
Quote from @Courtney Mccrear:
Hey how’s it going everyone? Could someone please give me some advice?
So I'm trying to scale up and acquire more doors, I have 2 rentals I've acquired through tax deeds already but I'm currently stuck trying to get to 3. I'm ran into a hiccup in my current primary home! I used my Va loan to acquire this home with hopes to BRRR after this year, I refinanced and started on the rehab but got ahold of a bad contractor (all my fault) and he beat me out of 35k. I have about 50k in equity but I can't tap into it because of my dti ratio on my credit is too high. The downstairs is basically unfinished because of the contractor, but at this point I don't mind selling my primary or doing a lease option. I would like to sell my primary home and acquire a multifamily to house hack.
Any suggestions?
You cannot 1031 a home that you are occupying. Please check with your tax and legal professional.
If you decide to sell, that opens up your VA to purchase a 1-4 unit and start your house hack. You may find difficulty selling with an unfinished downstairs. It may not be considered financeable; that diminishes your buying pull to investors or cash buyers willing to take on a project. But I understand where you are coming from. We sold our first home to get into a 4plex. We had about $40k in equity but $10,500 was tied up as a 2nd lien from a down payment assistance grant and we couldn't refinance our equity because there wasn't enough and couldn't get a HELOC because the 2nd lien position was taken. So selling was our best option.
If you've lived there for 2 of the most recent 5 years, you can defer on your capital gain taxes you'd experience (again, speak with your tax and legal advisors). If you're able to finish the downstairs on your own, that'll be the best way to maximize your profit and then use that to purchase your house hack! That's what we did. Best of luck! Hope that helps. Not a bad strategy at all :)
- Real Estate Agent · Atlanta, GA · Member since 2020 · 414 posts · 233 votes3y
Are you house hacking now? If not, this could be a good opportunity to do so that would add some yield to your investment while you wait to exit. I don't know you're exact situation, but this extra income could allow you to tap that equity.
Could you do some of the work by yourself and save some money on labor?
Could you househack AND do some of the work by yourself?
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