Your opinions for our first investment plan? House hack vs. BRRRR

[Daniel Claroni]

Hi everyone! I’m looking for advice for a first-time investor in the Omaha area.

Our original plan was to start with house hacking a multifamily and then move on using the BRRRR strategy on single families. But now we're trying to decide if it'd make more sense for us to start with the BRRRR strategy on an investment property first and then look for a multifamily primary residence later given our situation and the market conditions.

We'd like to house hack a multifamily with a primary residence mortgage rate as our first investment. However, we currently live in VA and don't have jobs lined up in NE yet (so we can't get a primary residence loan in NE just yet). While we can get pre-approved for a loan in NE with our current jobs, the pre-approval is only good for 90 days and we won't be able to close until we can prove income in NE for it being our primary residence. Getting a pre-approval now would put us with the pre-approval expiring in May and us not being able to close until at least one of us has a job lined up. My fiancee's contract is over in June and our lease ends in July, so we think to make the house hacking work, we'd have to wait until at least the end of March (or whenever one person gets a job) to get pre-approved and start putting offers multifamilies.

Given that the Omaha market is pretty hot and there aren't too many multifamilies out there to start with, we're considering changing our strategy to start out using BRRRR on a single family investment property so we can get started earlier. Then we wouldn't have to worry about getting a primary residence mortgage until we move and should theoretically be able to refinance relatively easily since the market is hot. Thoughts?

[Antonio Esquivel]

Either option is fine. One thing you want to keep in mind is that banks will count any mortgages you have against you when you apply for your 2nd property. So if you two are approved for a mortgage of $200k lets say, and you use 100K for the first property, your next property can only be 100k. Banks will only start counting rental income after you have 2 years of history on your taxes. I only say this because I had a friend use the BRRRR strategy but then couldn't get approved for a 2nd property due to his debt to income ratio.