Unusual BRRRR situation, need help
Hey ya’ll
-Bought an REO foreclosure (cash) as an Owner occupant last April.
-House was a 3/1, converted it into a 3/2 then I had the idea of enclosing the carport and terrace.
-The carport is a 1/1 “in law space” with its own entrance and the terrace is a smaller 1/1 (Still with its own entrance but is still connected to the main house) It’s effectively a 5/4 Triplex now.
-it’s my first deal, wasn’t sure how having two attached but disconnected rooms would effect the appraisal, so I left the smaller one like a room and plan on closing it after the appraisal
-I know I could increase the value by adding them but I also understand the diminishing returns of adding square footage/rooms/bathrooms. Ultimately, I did this to combat the cash flow compression after the refi.
-In the process of doing the appraisal, but my bank is offering me a 2.95 HELOC instead of a cashout refi, which works out because I get more cash flow and still be able to leverage the forced equity with the HELOC and service the debt when I use it.
-The situation - i’m currently living at my parents home but the house is still my primary home(which is why the bank is offering me a heloc)
-I plan on renting it out, but I want to do it the best way possible in terms of asset liability, insurance and taxes. Im thinking I could rent out the two bigger units and “live” in the smallest one.
-Not sure if that’s necessary? Should I just rent out all units?
- what kind of insurance should I get?
- should I do a quit claim deed to an LLC, not sure I could do that to a primary home?
Thanks for your time, look forward to hearing from you guys!