Next Step After House Hacking

[Art Maydan]

I just bought a duplex and am currently getting it rent ready (was a gut rehab with no utilities/shelving/etc.) to house hack. My goal is to replace my income ASAP. What should my next step be? I bought with 5% down conventional. Is there a limit on how long I have to live here or can I owner occupy another multifamily with 3-5% down conventional as soon as I have the down payment and a deal?

Seems to me that owner occupying another unit is the best step. We love this place though and would like to stay for a bit. Is there an equally quick way to acquire a pure investment property (no turnkeys)?

[Dave Foster]

@Art Maydan, To get the sec 121 primary break you must live in it for 2 out of the previous 5 year period.  If you do then the first $500K of profit (if you're married) is tax free.  

If you move out before living there two years then you could rent both sides and do a 1031 exchange.  You would pay no tax but it would all be deferred not free.

For you a hybrid approach might work best.  Live in one side for two years and exercise the primary residence exclusion = tax free.  Allocate the other 50% that was rental into a 1031 exchange and purchase a new replacement property  = tax deferred.