1st Multi family house and planning to live in there

[Amily Yi-Chieh Tseng]

Hi everyone. Rookie to RE investment here. My family really needs a bigger space to live, my husband is a first time home buyer so we are planning to Take the low interest rate opportunity to get a multi family house.  And maybe after a year or two we will move on to our next single house or something else.  My kids are still both under 5 so we still have time before settle down on a certain school zone but we do want to stick to certain area close to hubby’s work. We plan to continue the buy and hold process down the road.

So my questions are: Would you still follow the 1 or 2% rule when selecting the property even though we plan to live in one of the unit for a while?  I’m debating should we go though the renovation, and not sure what loan should we get?  should we go to private lender in this case?  Thank you!

[Jaysen Medhurst]

If you want to keep the property as an investment after you move out, @Amily Yi-Chieh Tseng, then you need to do a full rental analysis of that property fully rented and with you living in one unit. You'll probably have to hit at least the 1% rule in order to cash flow, fully rented. No way you're going to find a 2% property in any part of Chicago you would actually want to live.

A live-in BRRRR is a great way to create value, but how big of a renovation do you really want to take on with 2 little ones in the house? I have a 3 and 5-year old and can't imagine willingly stepping into such a thing...that's just me.

As far a loan, you want to a normal owner-occupied residential loan. There are plenty of products that allow for low down payments. Talk to all of your local banks and CUs to see what they have. Avoid FHA, if you can. There's more paperwork and you don't automatically drop PMI once you hit 80% LTV.

I don't see any advantage of using a private lender unless you have some unique circumstances.

What price range are you considering? How much cash do you have to use for DP, closing costs, renovation? How's your credit?