Turning current primary into investment & Purshing a new primary

[Zachary Pichette]

Hi Everyone,

I have a few questions regarding the purchase of a primary. Let me start out by laying out my current situation.

In April of 2017 I purchase my first primary residence in the metro Detroit area. I have been "House Hacking" this home and am currently living with two other tenants. I am already making a profit on my total monthly housing related expenses with them in it. I have a third person who would be ready to move in whenever. Currently I have no rental agreements set in place but they would be willing to sign one (I've already floated the idea). I would like to move out of this home, rent the room I currently stay in and purchase a new primary residence in a nicer area.

Since buying this home I have received a significant raise in my base salary from changing companies, and have inherited $20,000 from a relative. I am curious as to what I should be doing now in order to prepare myself to purchase this new primary by the books come Q3 or Q4 of 2018.

Question 1) Should I try to purchase the new primary and refinance my current primary into an investment at the same time as a 2-pack? Or would it benefit me more to move in with my parents for a period of time after refinancing my current primary into an investment prior to purchasing the new primary?

Question 2) Because I purchased my current residence as a primary, will I face any penalties in trying to purchase another primary so soon?

Question 3) If I don't want my current primary to affect my DTI in the new primary purchase will I need to be moved out or will having the lease agreements of my current tenants enable me to reap that benefit?

The numbers.
Currently my DTI is 25%
My Current primary was purchased for $98,000 and value remains the same.
My monthly mortgage payment is $770
One tenant pays $650
The other tenant pays $500
We split utilities.
The third tenant I get would also pay $650

My credit score is 760 per Bank of Americas "View your FICO score"

[Kerry Baird]

You don't have to refinance when you move to another property.  Keep the owner occupied loan in place.  When you bought a house you signed a form saying that you intended to remain in the house as an occupant for at least 12 months.  You could not foresee a job change. You'll do this again on the next primary, and sign that you intend on staying in this property for at least 12 months (assuming this is true).  

When you buy a purposeful investment property, then you will pay a higher interest rate and need a higher down payment.

That all is on the mortgage end of things.  On the tax side of things, we get favorable tax treatment when we occupy a house for at least 2 years out of 5 years, and get the capital gains tax free.  You can move back for a year within the 5 years if this is important to you. For us, with military employment, it has been 2 years out of 10 years, which is a terrific reason to hold houses when we've moved to a new duty station. I have set out to live in our primary house for at least 2 years, due to this.