after paying my home off I am wanting to jump into to real estate head first. I am having trouble deciding if I should buy an investment property, Live in it and rent my current home while fixing up other property. Or should I buy duplex live in one side and rent the other side, plus my home?
The hardest thing will be trying to get my wife onboard. As we are expecting a child around when this will take place (spring 2015).
I'm sorry. This old dude doesn't even know what you mean by "house hack"?
haha @Bryan L. I've heard them use the term on the podcast lately. It just means you buy a multi and live in it owner occupied and rent out the other units.
@Michael S. I would run the numbers on both. I just did it as me and my wife are in a similar situation and the numbers looked way better if we bought a two family for us to live in. Ultimately, you need get your wife on board for which ever idea you go with. Luckily, around my parts you can find two families in nice family friendly neighborhoods.
"House hacking" seems to be a buzz phrase for various forms of investing that involve you living in an investment house. Personally I really dislike this term.
Living in a house while fixing it is very disruptive to your home life. Is this your first child? If not, you understand what you're in for. If it is your first child you really have no clue how much your life is about to change. If that's the case then I would not recommend buying a fixer and trying to rehab it while living in it and having your first baby at the same time. A divorce is a very real prospect in that situation. I'm not even joking. Especially since you mention the difficulty of getting your wife on board.
I think there are serious trade offs you make when buying a duplex (any multi) and living in one unit. When you buy a residence you have a whole set of criteria, none of which are "is this a good investment". When you buy rentals, that's ultimate your ONLY criteria. If you try to make one property do both, you're going to have to compromise. My normal advise would be to buy a good investment even it means compromising on the residence requirements. But, here again, with a wife that's not fully on board and a new baby on the way I think you're playing with fire. The only real upside to this process is the low down payments to get into an OO multi.
I think a better strategy is to realize that a residence is nothing but an expensive doo-dad. Buy or rent the cheapest thing you can that meets your needs. Then, save and buy rentals as you have the money. Focus those purely on profitable rentals.
Jon Holdman, Flying Phoenix LLC
@Michael S. As usual @Jon Holdman makes a good point. There really isn't an "or" in your question. The question is will you buy an investment that you also live in, or an investment that you don't live in? I think that question only gets answered by what deals you run across. Most people do the house hack as a way to buy an investment when they can only afford one if they live in it, or if it makes the most sense to them financially (I currently move into every property I buy because I save so much on downpayment/financing). If you can buy a good rental without moving, why move? Look for deals and be open to creative solutions, but ultimately the numbers will decide what you should do next.
we live very small and very cheap. the reason I would like to live in my next potential rental is better financing, closer to jobs, and near the soon to be grandparents :) . Moving would be very easy. the SFR's i am interested in are in the 60k-80k range, most don't need major rehabbing just small things. very blue collar areas. duplex's in general are hard to find in my area. most are around the 250k range which is too high for me but I have found a few.
if I move from my home and turn it into a rental it should gross 850 month. and then the only debt I would have is the 1st/2nd mortgage for the potential rental.
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