Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
Starting Out
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 2 years ago on . Most recent reply

User Stats

11
Posts
2
Votes
Andrew Berardi
  • New to Real Estate
  • New York
2
Votes |
11
Posts

House Hack Idea - Need Advice

Andrew Berardi
  • New to Real Estate
  • New York
Posted

Hi!

I am currently renting a unit in a multifamily house. A few years ago the landlord wanted to sell, but decided not to.

Plan A:
is to get in touch with a lender to see if I could qualify for a cash loan. In parallel I want to run the numbers, and see if cash-flow from the other units would be able to pay mortgage/taxes/insurance/etc.

If the numbers seem good…I want to make an offer to the landlord. My goal is to be able to house-hack here, and then move on to other forms of investing in the future.

I know this idea seems like a long shot, so Plan B is to find a deal on a multi-family house, live in one unit and rent the others. After reading BRRRR and listening to the BP Podcasts, House hacking seems like the best way for me to get started in investing. One of the episodes mentioned utilizing NACA to find a house that already has tenants, and moving into it and house hacking as well.

So…does Plan A sound like a good idea? Any advice on how I should go about contacting a lender? Would I need to get in touch with an agent as well to help me close the deal?

Also…whether going with Plan A or B…should I be starting an LLC to put the house under that instead of my name?

I'd appreciate any advice.

Thanks,
Andrew

Most Popular Reply

User Stats

219
Posts
174
Votes
Kevin Paulk
  • Rental Property Investor
  • Brooklyn, NY
174
Votes |
219
Posts
Kevin Paulk
  • Rental Property Investor
  • Brooklyn, NY
Replied

@Andrew Berardi

Reply to Plan A 

You're assuming he would sell or entertain your offer. I would first try and find out more info about the landlord & the property before seeing the lender for plan A. His answers could potentially help you shape a plan for how to go about purchasing or not purchasing the property. The idea would be to gauge his motivation and see what problems he is facing with the property if any. 

A few questions I would ask.

Is he still looking to sell? why or why not!

If he is looking to sell how soon ?

If he is looking to sell what number did he have in mind?

If he was looking to sell what would he do with the money?

Why did he decide not to go through and list the property a few years back?

  • Kevin Paulk
  • Account Closed
    • Lender
    7
    Votes |
    20
    Posts
    Account Closed
    • Lender
    Replied

    Finance the house with an FHA loan in your personal name with a 3.5% down-payment.

    You have to live in it for one year. After closing, I would quit claim the title from your personal name to an LLC owned by yourself for liability purposes.

    You can't get an FHA loan if you try to buy in an LLC.

    Plan A seems do-able. Start with that.

    User Stats

    11
    Posts
    2
    Votes
    Andrew Berardi
    • New to Real Estate
    • New York
    2
    Votes |
    11
    Posts
    Andrew Berardi
    • New to Real Estate
    • New York
    Replied

    Hey Gaetano…I've done some research on FHA loans and they seem like a good idea.

    Thanks for clarifying!

    REsimpli logo
    REsimpli
    |
    Sponsored
    Investors reported closing 2.3x more deals with REsimpli. The #1 CRM for List Stacking, Free Skip Tracing, Drip Campaigns, Cash Buyer Search, and more!

    User Stats

    11
    Posts
    2
    Votes
    Andrew Berardi
    • New to Real Estate
    • New York
    2
    Votes |
    11
    Posts
    Andrew Berardi
    • New to Real Estate
    • New York
    Replied

    @Account Closed would I be able to take out another FHA loan a year or two after I quit claim the title?

    User Stats

    1,098
    Posts
    746
    Votes
    Ray Hage
    • Investor
    • Fort Lauderdale, FL
    746
    Votes |
    1,098
    Posts
    Ray Hage
    • Investor
    • Fort Lauderdale, FL
    Replied

    @Account Closed pretty much summed it up for your start. 

    @Andrew Berardi You can't really have multiple FHA loans at the same time. There are a couple exceptions to this but you definitely will want to speak to a lender to get the details on the restrictions for you 2nd purchase.

    User Stats

    219
    Posts
    174
    Votes
    Kevin Paulk
    • Rental Property Investor
    • Brooklyn, NY
    174
    Votes |
    219
    Posts
    Kevin Paulk
    • Rental Property Investor
    • Brooklyn, NY
    Replied

    @Andrew Berardi

    Reply to Plan A 

    You're assuming he would sell or entertain your offer. I would first try and find out more info about the landlord & the property before seeing the lender for plan A. His answers could potentially help you shape a plan for how to go about purchasing or not purchasing the property. The idea would be to gauge his motivation and see what problems he is facing with the property if any. 

    A few questions I would ask.

    Is he still looking to sell? why or why not!

    If he is looking to sell how soon ?

    If he is looking to sell what number did he have in mind?

    If he was looking to sell what would he do with the money?

    Why did he decide not to go through and list the property a few years back?

  • Kevin Paulk
  • Account Closed
    • Columbus, OH
    255
    Votes |
    427
    Posts
    Account Closed
    • Columbus, OH
    Replied

    Plan A is good, owner has clearly considered selling before and could be convinced with a solid offer. Would be great for you as you don't need to move and have tenants you already know. LLC not necessary for someone owning one home, and LLC's can't get FHA loans, the main benefit of house hacking.

    User Stats

    1,672
    Posts
    835
    Votes
    Mohammed Rahman
    • Real Estate Broker
    • New York, NY
    835
    Votes |
    1,672
    Posts
    Mohammed Rahman
    • Real Estate Broker
    • New York, NY
    Replied

    Hey @Andrew Berardi - why do you need a cash loan for plan A? Isn't it possible to get an FHA loan and use that for your first investment?

    Alternatively, you could also speak to the owner about doing some sort of seller financing - if you already have a good relationship built up as a great tenant, they may be open to it. 

    Account Closed
    • Lender
    7
    Votes |
    20
    Posts
    Account Closed
    • Lender
    Replied
    Quote from @Andrew Berardi:

    @Account Closed would I be able to take out another FHA loan a year or two after I quit claim the title?

    You can only have one FHA loan at a time. If you quitclaim to an LLC, it is still an FHA loan. You'll have to refi out to conventional.

    User Stats

    11
    Posts
    2
    Votes
    Andrew Berardi
    • New to Real Estate
    • New York
    2
    Votes |
    11
    Posts
    Andrew Berardi
    • New to Real Estate
    • New York
    Replied
    Quote from @Kevin Paulk:

    @Andrew Berardi

    Reply to Plan A 

    You're assuming he would sell or entertain your offer. I would first try and find out more info about the landlord & the property before seeing the lender for plan A. His answers could potentially help you shape a plan for how to go about purchasing or not purchasing the property. The idea would be to gauge his motivation and see what problems he is facing with the property if any. 

    A few questions I would ask.

    Is he still looking to sell? why or why not!

    If he is looking to sell how soon ?

    If he is looking to sell what number did he have in mind?

    If he was looking to sell what would he do with the money?

    Why did he decide not to go through and list the property a few years back?


     Thanks Kevin…there are all valid points.

    I figured it would be good to see if I was able to qualify for the FHA or any sort of loan, before I planted the seed that I was interested in buying.

    User Stats

    11
    Posts
    2
    Votes
    Andrew Berardi
    • New to Real Estate
    • New York
    2
    Votes |
    11
    Posts
    Andrew Berardi
    • New to Real Estate
    • New York
    Replied
    Quote from @Mohammed Rahman:

    Hey @Andrew Berardi - why do you need a cash loan for plan A? Isn't it possible to get an FHA loan and use that for your first investment?

    Alternatively, you could also speak to the owner about doing some sort of seller financing - if you already have a good relationship built up as a great tenant, they may be open to it. 

     Hi @Mohammed Rahman I was thinking a cash loan would have been an alternative if an FHA wasn't achievable. I will also look into seller financing.

    Thanks for your response!