House hacking requirements

[Bryan Payne]

Hey guys, I've been researching multifamilies for the past few years and just wanted to say thanks for all the help these articles, posts and comments have been. I've finally purchased a three family home to "house hack" my way into the real estate world. Things are going well, and now that I've made the first investment. I wanted to know more about the next. So my question to you is how long til I can purchase the next MF? I know I have to live in this property for at least a year, but is the rule as a landlord 2 years? Also, any pointers on how to prepare over this year (or 2) to make things go smoothly on the next one? Thanks in advance!

[Dorothy Butala]

Hey Bryan, you could buy you next property in the next month if you want to, but I am assuming you are asking about the 2 year period due to banks wanting to see 2 years of filed Schedule E's to use the rental property income in the calculation for what loan they will give you.  Definitely file your Schedule E's when you do your taxes, that way you can provide them to the bank and hopefully get more borrowing power since they will use a percentage of that income towards your other income to determine your loan amount.  Keep expenses low, and the rents high.  Some items on your Schedule E will be added back, like mortgage interest, to determine the rental income...you will want to ask some banks what numbers they add back, and that can help you project what amount of income you will have from your rentals for consideration of the loan. Also ask the bank what percentage of rental income they use when calculating what they will lend to you.  If you have the ability to make any changes to your current property that will increase the value, you may want to consider those as well.  Doing so may give you an equity position in your current property that you can use to roll over into the purchase of another property.  Hope this helps!