BRRRR or House Hack

[Gerald Lord]

I've done a ton of research and my plan was to BRRRR small multifamily properties to get started. I went to a local REI meeting and met some investor friendly lenders and was recommended that I get my credit up to 680 then apply for business funding so i have some cash in the reserves then apply for hard money and then go for a deal.

I signed up for credit repair last month and I'm waiting for my credit to increase. While doing so I've been looking into house hacking. My lady and I currently finance our first house in NJ under a fha loan and we're considering house hacking a multifamily to free up our income (or possibly add to it). I was curious to find out how would we fund repairs if we found a distressed multifamily?? Would we be able to use hard money, get the repair then refi into a fha?? Or does house hacking not work with distressed properties??? 

I've done little research on house hacking so far but while I'm doing so I figured someone might have some insight or at least point me in the right direction so I don't consume a bunch of unnecessary info. Thanks in advance! 

[Erik Manley]

Gerald, since your FHA loan is already in use, you can possibly qualify for a HomePossible loan at 5% down on a 2-4 unit. As long as you make under the income limits in the county you're trying to buy and only have one other property, this may be your best option. You or your wife can apply individually if combined you make too much money.

The bigger concern would be if you're going to be moving from a single family to a multi. It's not a terribly big deal, but you'll have to write a Letter of Explanation stating you intend to live in the property and understand that it's mortgage fraud if you don't.

Let me know if you have any other questions!