Questions about financing my first 'house hack'

[Jerry Wolf]

Newbie here. I am very interested in 'house hacking' my first property. I've found a property (triplex) I like and I've run the numbers and am happy with the potential returns in my market (south Florida). I submitted an offer within a week of the property being listed, but the seller has since decided to only consider cash offers. The property is still available (one month later), I've followed up with the listing agent and the seller is not reconsidering other financing offers.

A hard money loan isn't an option, since it will be owner occupied. Are there other financing options or loopholes that I can use to get this deal done? Or should I move on and continue my search?

Thanks for your help!

[Scott Trench]

The incredible financing options available to you in your first or any house-hack are a primary avantage and really, in my opinion, shouldn't be discarded. A 3.5% or 5% down payment option, on a fixed interest federally insured mortgage is a massive advantage and one of the few available to you as a first-time investor or house-hacker. 

I think that the answer here is to follow @Jim Blackburn's advice and figure out why the seller is not accepting non-cash offers, months after listing the property. That doesn't smell right to me. Why only accept cash offers? Usually, because you want to close quickly. If that's the case, he should be lowering his price if the place is sitting.

However, we can reasonably guess that this seller is not refusing all but cash offers out of a desire to sell quickly - his property has sat on the market for a month. This to me suggests another possibility - the possibility that the property is not habitable, or the seller is worried that it has an issue that someone in your position, or an inexperienced investor without significant access to capital in general will take issue with. Perhaps a high probability of a health, safety, or high-ticket repair item. If that's the case, then he might believe there is a high probability that you will be scared away from the property by a certain type of issue (and rightly so), even though he or she is unwilling to communicate those explicitly in the listing.

Bottom line - I think you follow up regularly and try to get a good idea for why the seller is averse to you using traditional or FHA financing - perhaps with a starting guess that there are some skeletons that are likely to be uncovered in inspection and due diligence.

I'd strongly suggest that you do not turn to another source of financing to close the deal on this first purchase. IMO - don't throw away this huge financing advantage and expose yourself to what could be a tremendous amount of risk. 

Note that I'd have a different tune and argue that this is completely different if you are going on purchase number 5, 7, or 12 and have many years of experience and a solid cash cushion to bankroll the problems that might result in a great deal.