Newb Investor Looking to BRRRR and/or House Hack. Advice Welcomed

[Ryant Nelson]

Hello BP, 

I'm relatively new to the party. My name is Ryant friends call me Nel. I am new to investing. I work full time as an engineer in Memphis, TN. I'm actively searching for my first house hacking opportunity. It will free up some serious flow (that I'm currently paying in rent each year). 

Based on my financial situation, I may be able to BRRRR either way, house hacking a multifamily is the most straight forward path for me. I am really excited.

 I've been bingeing on both podcasts and reading every book that I can get my hands on. I've been analyzing potential deals about 5 per day for about 4 weeks. I've gone on home tours and attempted to estimate rehab costs ( got some tips from youtube ).  I am preapproved and I have a RE agent who is going above and beyond to help me. 

I'm committed and highly motivated to building a legacy and financial education for my future children and also provide great returns for family, friends and colleagues. 

Any last words of advice before I take the plunge? Thanks 

[Jonathan McGee]

Hey @Ryant Nelson and welcome to BiggerPockets! It sounds like you are already aware how helpful BP is and the plethora of information available here to help guide you along the way! Not to mention the countless connections that can be made here.

I'm also glad to hear you are here in Memphis and looking to invest locally! Memphis has great potential for solid investments and we have a unique market. Since you are currently residing here, you'll have a first person view of the market and be able to supervise your own process along the way.

I just responded to a similar post from another member that is starting out in Memphis. While I understand the excitement of the "house hack" idea, it can be challenging to start out with here in Memphis. Memphis' strong suit is in single family homes and not so much on small multi family properties. We do have a ton of larger multi family units, but duplexes are scattered throughout the city and also one person can own one side while another person can own the other. They are treated as two individual properties and not as one. The idea of "house hacking" can be easily translated to just owning two single family homes while living in one and renting the other. Granted, if you find a deal where you can purchase both sides of the duplex, you can get a traditional loan that will treat the purchase as one mortgage. This is where the house hack idea steps in and makes sense. Again though, it can be challenging to find a duplex in this city where both sides are owned by the same owner and they are selling it.  This is even more challenging with triplexes and quads as they are rare in Memphis and seem to be only in certain parts of town that are less desirable to live in.

I have seen and helped several investors using the BRRRR strategy here with single family homes and have had great success! You can come across several value add deals that you can buy with the cash up front, perform a necessary remodel (I say necessary meaning you do not have to go above and beyond to get a full 75%-80% bank loan), occupy with a tenant and cash out refinance. Many times you can even buy a property that is already cash flowing and in great shape at a price discounted enough to qualify for a full cash out refi. Cash talks!

I would consider using the house hack method on a single family home as well. You can purchase a nice B class property say in Cordova for a discounted price from the market value, rent one or two rooms out for the first year and earn almost as much as if you were in a duplex. After that first year, you can rent the home out completely to a tenant and pick up a second mortgage on another property. 

There are also other options such as seller financing that you can dive into fairly easy and start cash flowing. Refinance into a better rate after the first year or so and repeat! 

Feel free to reach out if you'd like to discuss further!

Wish you the best in your success!