Need advice on house flip that I have to occupy

[Nathan Arnold]

Hi folks. I have an interesting situation that I would like some comments, advice, and input on. So I’m currently managing properties for my grandparents and am trying to get started with my own properties. I currently live in a house that is paid for. I’m looking at investing in a house that is slightly bigger than mine. It needs a lot of work but I could get it for $30,000. I could have it fixed up for less than another $10,000. It should resale for $60,000-$75,000. Sounds great right? 20-35 thousand dollar profit. Well they require you to be the primary resident for 1 year. So my thought right now is that I make that house livable and move in. The payments would be around $150-175 a month. My house would rent for around $575. Then at the end of one year I could find another house to live in that is more convenient for me and either sell or rent the house out. So here are my questions: 1- Is it worth the move? The location would be a little less convenient for me and there’s the hassle of moving. But I see potential of profit in the long run. 2- If I decide to rent the house out after a year and find another house for me to live in, would it be difficult for me to get a second loan? I would have the income of my current house, the new house, and my day job. But how hard is it to get a second loan? Thanks for your help in advance!

[Melissa Kirchhoff]

@Nathan Arnold - 

1. I think that's a very personal decision. I would take a hit like that for a year to make that money but it depends on you and your life situation. Just me and my SO, we are simple people, so we'd deal for that future profit. However, if you had a family or a very intense life/job, maybe not. Also, is a deal like that fairly easy to come by in your area or really a once in a lifetime? That's what I would look at before deciding.

2. I would do something like a brrrr on that and have a nice sum for the next purchase. (I think the more money you have in your account the more likely they are to throw a loan in your direction!) But it would probably depend on how long and how much income you are showing. I would assume your day job would get you the loan, but I think to consider the income from being a landlord, most banks want 2 years (so worst case, you stay another year at that property or your house) and then move forward.