My husband and I have the goal of becoming financially free as soon as possible. We currently own a townhome in Maple Grove and have enough savings to get our business started. We see three options:
1. Use our savings to invest in a multifamily home, house hack, sell our current home, then use the money we make from selling our home to invest in flipping another property. We figure after selling our house we will have $70K+ to invest in a house flip.
2. Invest in a multifamily property, house hack, rent out our current home, and get a HELOC ($50K) to invest in a house flip.
3. Continue living in our current townhome and get a HELOC ($50K) plus financing from bank/hard money lenders to do a smaller flip. We expect to make $10-$20K and grow our business slowly.
We want this to be a long-term business and eventually invest in both renovation properties and rental properties. Which is the best option to set us up for the most success? We are thinking the first option is the best, but is there anything we are not taking into account? Any advice would be very helpful. Thank you!
There is not a right or wrong answer to your question. My suggestion would be to educate yourself in alternative ways to buy or control property. Using bank financing and leveraging your personal home adds risk when you are just starting out. In the event of a downturn or a mistake on your part, are you prepared to lose everything you have? I would study lease options, subject to purchasing, and seller financing structures. These are great ways to build a portfolio without personal guarantees of using huge amounts of cash.
All of the strategies will work but two of them involve you having to wait to find a multi-family property to move into before looking for a flip. There aren't many properties available now so this could delay you a bit if you don't find anything you like. How about you get a HELOC to start looking for a flip at the same time you are looking for a multi-family to move into? The fees for setting up a HELOC aren't high, interest rates have been rising, and you can only get a HELOC while you live in the property so it would be better to set that up sooner than later.
In regards to selling your current place - that will depend on market prices and whether you can do better putting the money into another property.
Also, you don't have to live in a multi-family property to become "financially free" but if you stick with one of your plans to rent your current house and move into a multi-family property it will likely cut your monthly expenses.
Thank you everyone for the feedback. We decided to sell our house and take our time looking for a multifamily property in the end!