How to Exit a House Hack

[AJ P.]

Hi everyone! I recently purchased a SFH, renovated it, refinanced, and am now renting it out (basically a BRRR). The money I used for the initial purchase was borrowed and the refinance paid off that initial amount. Since I am now low on capital, I'm exploring a house hack as my next investment opportunity given the smaller required down payment. I understand with an FHA loan and house hacking it must be owner occupied for the first year (but I have seen some caveats). My concern with a house hack is keeping the title in my personal name rather than transferring over to an LLC. I believe in PA this is essentially treated the same as selling the house to a new entity, just without the agent costs. I was just curious if anyone had any experience transferring title or if the houses should just stay in my personal name and repeat each year? Thanks for all the help!

[Matt Dingus]

Hey AJ, congrats on the BRRRR! House hacking is hands-down the perfect next step. I've done three house hacks myself and I'm currently looking for my fourth here in Pittsburgh.

You can go FHA, but there are also lenders who offer 5–10% down conventional loans—those will help you avoid the big PMI payment that comes with FHA. Personally, I prefer those over FHA but it also depends on the deal and what you qualify for.

As for LLC vs. personal name, all of my house hack properties are titled in my personal name. However, I have an LLC that I run all the leases, income, and expenses through. This is something my CPA (who's also an investor) advised—it helps with taxes and liability without having to pay transfer taxes and other costs to move the property into an LLC. I'm no expert in that space, I just listen to my mentors around me, so I'd recommend going over the details with your CPA or attorney.

Bottom line—don’t get stuck on this decision and let it slow you down. Just do it! House hacking is a tried-and-true cheat code for building wealth in RE.