All Forum Posts by: Luke Stewart

 My girlfriend will be purchasing it with me. 

I am in Colorado (my home) in between work contracts. I generally have to leave for 3 months, then I come home for a few weeks before leaving again. My girlfriend is there more frequently as all our family is there and she is a remote worker. The current issue is that I start a new contract in NYC in 2 weeks and I will be there until April minus a few weeks here and there. Right now it seems I will have to wait til after NYC to close since I will be back in CO for a few months working after that. I was hoping to get this done sooner so that I could move my stuff in and have the home ready before I am there full time, especially since my girlfriend will be back and forth.

I recently got preapproved for an FHA loan on a new primary residence. However, the underwriter has come back to me with issues with my job. I am a contract worker with a W2 from a recruiting agency and I work out of state for 3 months at a time. The issue is that the underwriter says that FHA won't allow the W2s to be out of state eventhough the home will be my primary residence whenever I am not working, it will house all my belongings and will be my permanent home. For my job I am required to have a primary residence outside the state where I am working, which is what this house would be. Has anyone run into this issue and found a solution? I thought a letter from my company explaining the situation would work but that didn't clear with the underwriter.

 Not exactly, when house hacking you are going to get all the equity built up regardless of units, but if you need to sell the first duplex in order to buy the next home (whatever it is), you will still have to pay capital gains tax on the unit that you are renting. You get to defer capital gains in your primary if you buy a new primary and defer capital gains when you sell an investment property to buy an investment. So what he is saying is to sell and buy a bigger one your will always owe a % of the capital gains tax due to the entire property not being your primary. @Gregory Schwartz bought a 4 unit to keep long term, so when he moved out he just bought a new place to live, not dealing with capital gains at all because he didnt sell. He left his equity or did a cash out refi and moved on. So now he owns a 4unit which he rents all 4 units, and lives in a SFH and rents out a room. Not sure why he chose SFH, maybe it was just the next step for him.

Personally I think house hacking works best where your first one you keep long term (even if only a few years). Once you move out, whether it be after 1 year (minimum) or 2 you keep the first and turn it into an investment property (I believe its 1-2 years as a rental before its a true investment property tax-wise). Once it is an investment property then you can sell it using a 1031 exchange which allows you to defer capital gains tax, and use that equity to buy new investment properties. That is a great way to upgrade properties, one duplex buys a luxury duplex or a large multi unit or even multiple SFH. I hope this all makes sense!

What you are describing is not a house hack. A house hack is where you buy a duplex or triplex, live in one and rent the other units. You get the benefit of FHA 3.5% financing since its a primary residence while buying multiple doors that should cover all or most of expenses (depending on market).

This is a big piece. If you aren't careful you could get sandwiched between current prices/rates and the prices/rates of 6-8 months from now. Worse case scenario would be you buy now, rehab and then rates go up, prices go down and it appraises significantly less than expected and you're stuck. I am looking to do this but light rehab, owner occupied duplex. I know you said you can't house hack, but my advice is the same as many others in replying, be careful with numbers and don't bite off more than you can chew, first BRRR is scary, but it's one of the largest learning experiences in real estate. I am aiming for a BRRR that only includes things like kitchen, bathrooms and maybe some exterior work like paint, new fence. Things that I can afford to not get a quick refi out of. I wish you luck as I dive into my first one too!

I am going through this right now, you really have two options and it all comes down to money.

FHA: 3.5% but you pay PMI

Conventional: 15%, no PMI

You need to speak to a lender to determine what works for you in your market, my market is Denver and duplex runs about 600k minimum, so I have been looking FHA with the plan to refinance to conventional after a BRRR down the road. The PMI is crazy but its worth keeping upwards of 75k more in the bank. If you are in a cheaper market, the conventional could save you money. I would look around at your local lenders, I have spoken to a few and while the conventional vs FHA down payment rules can't change, rates and "creativity" can. The smaller lender I spoke to had more options on how to fund my down payment than the larger lender. Just call a few and explain your situation, good luck!

One thing I think is really interesting as I read this is how I can almost feel the general market where people are from based on goals, and it's a cool thing. Having my home base be in Denver, the idea of having 100 doors in a few years feels like insanity, but knowing that people can do that in other areas makes your brain think in new creative ways. This is a great thread, thanks for all the inspiration!

I BHAG is to be able to no longer go to work in 10.5 years, when I am 43. Inside that 10 years I have a general goal of owning ~10 properties, but that is flexible. My perfect situation is owning 2-4 properties, each being a multi unit of 4-8 units, on the higher end side/luxury. I plan on achieving this by adding more properties and using 1031 to roll them into larger properties or nicer properties. End of the day, I just don't want to have to go to work unless I want to. I own 1 SFH that I rent out (~900 cash flow), and in the process of trying to house hack a duplex in Denver (wish me luck!), after these two I would aim at a STR next.

Then in this situation my concern is how you're going to get 20% more equity to refinance and pay the heloc off. You close, you refinance, you either drop the % and owe mortgage insurance (if a lender will allow this), or you are sitting at the same value as you currently are and still have to pay the heloc off. Maybe im confused what you're asking but I dont see how this works.