House Hack or Brrrr a property I already have ?

Question

Seeking for advice from professionals , if you were in my position.

I’m a 22 year old working in the oil field . At the rate that I am going I will have 34k $in December  to start my real estate journey .

My job is incredible , being able to live frugally is fairly easy. I get a place to stay for free and I use my company truck to move around .

Back in my town in “Hillsboro Tx” I have a property that my father and I purchased cash in 2016. I have read the “ Beginners Guide to investing “  “the Brrrr Book”  and currently reading “set for life” . I know that education is my foundation to my success, so I love learning .

I am stuck at a dilemma , as phrased in the book “ Begginners Guide To Investing “  the donkey looking at 2 carrots .

I would Love to get a FHA loan and take advantage of my jobs free housing. To generate cash flow on top of my job.

I would also Love to Brrrr  the property I already have get my money back and do it over and over and over again .

I haven’t established a rockstar team just yet , and I haven’t talked to an a real estate agent  to look out for any 2-4 unit homes .

I would really appreciate some feedback on what y’all would do in my situation and what you’d shook for to start this journey .

-thank you ,

David Hernandez

Jaysen Medhurst · Answer

@David Hernandez, you find other people to invest, form an LLC, and start buying the properties. Ideally, you use cash and then put a blanket loan over a whole bunch of them.

With BRRRR you get your money back in the refinance step. The goal is to have no more than 75% ARV in a property, so when you refi all your capital comes back.

Eric Carr · Answer

I'd get the home you own ready and rented first, get that cash flow from that, get the experience, and then move to the next one. If you decide to continue investing in C class properties and areas, develop skills - focus on becoming great at running C class properties.

Partnering is great, but get prepared for that also. You could do by study or experience. I prefer both so if it were me I'd pump the brakes, get a few properties rehabbed and rented, and then go find partners

You dont want to lose your money and everyone elses - just get educated first

Jerry Padilla · Answer

@David Hernandez

I would get this home remodeled and rented before you decide to purchase any more properties. There are personal loans, home improvements loans that you could get to get the home renovated and rented out. Then use that rent to start paying of the loans you took out to remodel.

You are loosing rental income every month you don’t rent the property. I am sure you are probably paying insurance, and taxes at minimum on the property.

Michele Wax · Answer

Why has the home you bought not been rented?

Renting out a home is always a roll of the dice.

I would say get the first one rented out immediately.

You can get a FHA loan as long as that is where you sleep. IF your company sends you to work somewhere else and pays for you to be there that is not FRAUD to FHA loan.

If you don't ever stay at the place then its FRAUD.

I think you should be using the  34 k to fix what you have and rent it out.

Good luck!

David Hernandez · Answer

@Jaysen Medhurst

$12,000.00, class c neighborhood.

A family friend actually owns the properties down the street . She tells us that she has problems with her tenants and the usual from what I read in the books. I actually see huge potential in my market . They are building luxury apartments downtown , and a whole bunch of mom and pops restaurants as well. I’m seeing it right before my eyes and I’d hate to grab on when it’s too late!

How would pulling money together and buying these properties work ? (Sorry for my newbie question )

That process seems so cool to me . How you get your money back and do it over , and over and over and over again ....

Thank you for hearing me out . It means a lot

Jaysen Medhurst · Answer

@David Hernandez, you didn't forget a zero, right? Twelve thousand dollars? And they rent for $700-1000/month? That doesn't actually seem possible, but I don't know your market... Assuming all of this is correct:

What do you need a FHA loan for? In fact, what do you need any loan for? You have $34k. Buy 2 or 3 and get them rented. Why aren't you pooling your money with everyone you know and buying these by the dozen to rent them out?

I have not BRRRRed before. I'm actually looking at a potential one tomorrow.

David Hernandez · Answer

@Jaysen Medhurst

-In 2016 we paid $12,000.00 . It was a foreclosure auction held at the courthouse .

-Right now the property is worth $17,000.00 as is according to the city. (We gutted the inside of the house due to the fact that it was a pigsty when we bought it .)  we also have a construction background .

-No money has been put into the home , only time. (It has been sitting there for the past 3 years going on 4.)

- Houses on the same street (recently rehabbed ) are renting in between $700-1,000 a month .

I have made it my mission to make something great happen this year. Building my educational foundation to make the wisest decision possible. Thank you for mentioning the FHA Loan fraud. Have you “BRRRR’d” before ?

Jaysen Medhurst · Answer

@David Hernandez, FHA probably isn't an option as you would need to move in within 60 days and remain for 1 year. Knowingly violating this clauses would be mortgage fraud. That's not something you want to mess with.

Can you give us some more info on your current home?

• What did you pay? 
• What's it worth now? 
• How much money did you put into it? 
• What can it rent for?