House Hack Idea - Need Advice

New York, New York
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House Hack Idea - Need Advice

Andrew Berardi
New to Real Estate · NY · Member since 2023 · 11 posts · 2 votes

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

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Kevin PaulkPro Member
Rental Property Investor · Brooklyn, NY · Member since 2016 · 219 posts · 174 votes
3y

@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?

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  • Account Closed
    Lender · Member since 2023 · 20 posts · 7 votes
    3y

    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.

    2Reply
  • Andrew Berardi
    OP
    New to Real Estate · NY · Member since 2023 · 11 posts · 2 votes
    3y

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

    Thanks for clarifying!

    0Reply
  • Andrew Berardi
    OP
    New to Real Estate · NY · Member since 2023 · 11 posts · 2 votes
    3y

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

    0Reply
  • Ray Hage
    Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
    3y

    @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.

    1Reply
  • Kevin PaulkPro Member
    Rental Property Investor · Brooklyn, NY · Member since 2016 · 219 posts · 174 votes
    3y

    @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?

    2Reply
  • Account Closed
    Columbus, OH · Member since 2023 · 427 posts · 254 votes
    3y

    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.

    1Reply
  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    3y

    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. 

    1Reply
  • Account Closed
    Lender · Member since 2023 · 20 posts · 7 votes
    3y
    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.
    1Reply
  • Andrew Berardi
    OP
    New to Real Estate · NY · Member since 2023 · 11 posts · 2 votes
    3y
    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.

    0Reply
  • Andrew Berardi
    OP
    New to Real Estate · NY · Member since 2023 · 11 posts · 2 votes
    3y
    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!

    0Reply
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