Best Way to Turn Primary House into Rental Property

[Rick Sutton]

Hi everyone! I have a land contract on my house in Michigan. I owe about $130k on it and it is valued around $250k. I was planning to get a low down payment mortgage this Spring and live there. I am waiting on my 2020 tax returns because I didn’t show enough self-employment income the last few years to qualify for the loan amount last year.

I recently moved into my elderly Mom’s house full time to aid and assist her. Given I won’t be living in my house moving forward, I'm trying to determine the best way to use my house and my current situation to get into real estate investing.

I don’t believe I can still get a standard, low down payment loan if I’m not living in my house. Is that correct?

Can I still get a 3.5% primary residence loan and house hack it without actually living there every night?

If I want to keep it as an investment property, would it now require a 20% down investment property loan?

Would it be better to sell the house and take the equity to invest in more properties in better rental markets?

The house fails the 1% rule (median rent about $1,700 on a $245k property), however, it would cash flow about $400 / month if I do my own property management when I ran the numbers with a 3.5% down payment.

Thanks in advance!