Advice for next steps

[Paul Clemens]

Hello all,

I was looking for some advice with possible best next steps to expand on a newbie portfolio with 1 live in duplex (live on bottom, rent the top floor) rental. Especially in this market with high interest rates, high competition, and low supply. Here is the situation I'm in and what my goal is....

I currently live in central Connecticut about 30 minutes from Hartford. My wife and 5 children currently live in a duplex where we rent the top floor and live on the bottom. Our total mortgage is $2,300 a month. We rent the top floor for $1400 a month, leaving us paying $900 a month for just our house. We do not have much savings so could not afford to put another down payment on another multifamily , but since buying the property for 295K in 2021, the estimated price of the home currently is 407-430K. We put 25K as a down payment. With that said, are there any possible low risk steps we can take to acquire more property? I know the basic concept, but would an 1031 exchange into a more valuable multifamily be a good step to build our portfolio with the low savings we have, but the increased appreciation and potential equity since buying the property in 2021? We are locked in a 30 year fixed at 3.3 percent for this property. 

PS. If you need more information to give better advice, please do not hesitate to ask.

[Ryan Muska]

If your monthly payment on the property is only $2300, then you could most likely cash flow with the second unit rented out. So, I would suggest house hacking. Move out of the home and put a 3.5-5% down payment on the new primary home. That way you keep the old property and are able to obtain a new one.

As far as getting financing for the new home's down payment and closing costs, you could get a HELOC or Second Position mortgage on the old property to help finance the new purchase. You could even roll in the closing costs into the cashout/HELOC.