Which Tool to Use House Hack or BRRR

Question

I'm trying to figure whether or not a house in my neighborhood would be a good buy and hold rental.  The house is in good shape.  It just needs some wallpaper stripped and a coat of paint (inside).  I'd like to move into the house and do the work myself.  I don't know if this would be a house hack or a BRRR so I'm not sure how to analyse the deal.  It would be owner financing with no money down. The house will need a roof in about 5 years.   The owner has bad memories in the house and just doesn't want to think about it any more.  Any advice?

Barbara McArthur · Answer

My credit rating is around 650 because I'm co-signed on a lot of my darghters' college debt.  The girls are both making payments but until they can refinance without a cosigner I'm stuck with a high debt to income ratio.  I thought I'd start with owner financing then start hacking around the neighborhood using FHA.  Although I paid cash for my current house I can't even refinance and take cash out.  I will rent my current house out for $750/month when I move out.  I think the owner's problem with the house I want in to is that the marriage failed very quickly.  He moved out and was stuck with payments for a couple years because his ex staying in the house was part of the divorce settlement.  The house is just a bad memory for him.

Billie Miller · Answer

If you can get FHA then it wouldn't be much of a BRRRR deal probably. You usually can't get much better terms than an owner occupied FHA, so I doubt that refinancing would do much for you. You need quite a bit of forced appreciation to BRRRR, which I doubt you would see with just painting the place. It could be a good short to medium term flip though. Especially if you can house hack and have someone help you out with your mortgage.