NWROI vs Equity - House Hacking

[Patrick Schoeben]

Hi all, I am a recent Entrepreneurship graduate from Illinois State University currently studying for my Real Estate License after completing the holy grail that is Rich Dad Poor Dad! After finding my way to the Bigger Pockets Podcast and just today completing Craig Curelop’s phenomenal read, “The House Hacking Strategy,” I was left with a question regarding NWROI and Equity.

I plan to soon purchase a multi-family property (duplex) with a FHA loan and live in it for a single year. I would love to quickly purchase another duplex with another FHA loan after refinancing.

My understanding is that a 3.5% down payment would lower my initial equity, while increasing my NWROI. Whereas a higher down payment would increase initial equity, but decrease my NWROI.

In order to attain 20% equity to refinance into a conventional loan by the end of the first year, should NWROI be a large concern for me? Should I consider the larger down payment? Are there any other advisable methods or a happy medium to attain a viable NWROI while still achieving the equity I need?

I may be missing a critical piece here, but all responses are greatly appreciated!

Thanks,

Patrick