Best move to start my investing career? Sell or refinance.

[Juan Beltran]

Hello all, I now live with my family in a single family home (3/2) that I have considered selling for some time. I am undecided and would appreciate some insight as to what could possibly be better to my investing career. If I sell I would use the money to buy another family home and the remainder to acquire a BRRRR property. Another option I have reviewed is to refinance or HELOC my current home and rent it, while using the money to acquire a property where I could house hack. Any suggestions or insight would be greatly appreciated family! Thanks.

[Ryan Howell]

It depends on a couple factors:

How is your ability to get a loan right now (are you maxed out on DTI)?

Do you have a lot of equity in your home?

Do you love your home and will regret selling?

If you're maxed on on DTI, you will need to sell. If you can buy something much cheaper where you still can buy an investment and BRRRR, then you don't "need" to house hack. If you can't buy something cheaper than a house hack is your best bet.

If you have margin on DTI and have a lot of equity in your home, then it depends. If you really love the home, do a HELOC and start BRRRR'ing. If you don't have a preference to keep the home, then a house hack is going to free you up to start scaling faster and grow your portfolio, but you're trading some convenience.

This is the process I walk through with all my new investors. If they come to me and say they're approved for $400k, then I tell them to buy at $250k, so they have some margin for the second deal. Once the "ball" is rolling (you start getting rental income to offset your debt payments) your DTI stays fairly flat as you scale, but if you buy a single family at $400k and then want to invest, it will be a much slower process.