House Hacking (Fixer Upper vs. Move In Ready

[Preston Wallace]

Hey everyone, I am new to the BiggerPockets community. I have been listening to the podcast for the past few months as I have been exploring the idea of building a portfolio of rental properties. I am an accountant in my mid twenties in the Montgomery, Alabama area. I currently have one property that I am already house hacking but that started unintentionally as a new employee at my firm needed somewhere to leave and I had just purchased a 3 bedroom house in the area. 

Since I have begun listening to the podcast, I have developed the strategy I would like to take in building a portfolio. I hope to be able to buy a new house every 1-2 years. Move into the house and get a roommate, preferably two. and do this until I have 5 rental properties. After that I would aggressively payoff all the mortgages. Housing in my area is rather affordable so I have faith this strategy would work well. 

My question is I am not sure what type of property I want to pursue next. Top of the list would be a duplex, tri, or quad. However, those are hard to come by in my area so I'm not getting my hopes up. Next would be an ADU, but again there does not seem to be a huge market for these in the central Alabama area. So that leaves me with finding an older home that needs a face lift but I could likely start with more equity and a lower payment, or moving into a newer home for more money.

I would love to hear any advice from other members of the community that experience in these areas.

Side question. I was able to get a CRA loan on my current property. Does anyone know whether there are any stipulations that would prevent me to turning that home into a rental property? I have already lived in the home for one year. I do not want to have to refinance if I can avoid it.

[Nicole Marshall]

I will always advocate for buying something with value-add opportunity. Try to find a SFH in an area that would be desirable to rent by the room (some areas just aren't). A house with good bones that just needs cosmetic updates. Usually these are older homes owned by an older single person - their spouse recently passed and they need to downsize into something smaller with less maintenance. The older couples tend to keep up the house maintenance but don't cosmetically update anything unless absolutely necessary. At least, that's what I've found in my area. Check the MLS for current listings and then cross-reference those addresses with county tax records to see when the house was last sold.