First time investors - Potential BRRR/House Hack

[Frank Dixon]

Hi everyone, thank you for taking the time to read and help us out!

My girlfriend and I live in South Florida and are looking to buy a duplex/triplex to house hack. The South Florida market is tough, we've put in 2 different FHA offers but were beat both times to all cash buyers. We found a triplex we're interested in, details below:

• Purchase price: $400k, 10% down conventional loan, owner occupied
• Income: $1700 + $850 = $2,550
• Expenses: $3,312 (also accounting for vacancy 3%, maintenance 5%, CapEx 5%)

• Unit 1: 2/1 fully remodeled: rent is $1700, month to month tenant
• Unit 2: 1/1 remodeled, dated bathroom: we would plan to live in this unit. (CMA: $1100 rents)
• Unit 3: 1/1 needs full rehab: rent is $850, month to month tenant who has been there for 15 years.

So, we’d be paying $762 a month, which is better than our $2,000 a month apartment in downtown Fort Lauderdale. And if we moved out of unit 2 after year 1, we could collect $1,100 a month, cash flowing $338/month

Eventually, when the tenant moves out of unit 3, it would need a full rehab (~$25k), we would get a hard money loan to rehab the property. After the rehab, we’d refinance out to pay off the hard money loan and original conventional loan.

Purchase price: $400k

Rehab: $25k

ARV: $510k

Our questions:

Are we able to get a hard money loan for just the rehab? Would it be worth it to pay closing costs on the original conventional loan + hard money loan?

Would it be possible to refinance out of the hard money loan and conventional loan in to a new mortgage? (75% of $510k is $382,500, use the $382,500 to pay off $25k hard money + $360k remaining balance on conventional loan)

With the refinance, do we have to be renting out all 3 units? Or can we still live in 1 unit while we refinance?

[Bradley Sriro]

Hey @Frank Dixon, I would definitely avoid using hard money if at all possible... especially for a small $25k rehab. You would be better off finding a PM lender to get better terms and avoid any closing costs. I would say that using credit cards would even be a better option than an HML. Or if you will be living in one of the units, if you really look, you may be able to find a lender that will give you a HELOC since it will be considered your primary residence. Another option is to simply go for an investment property LOC. In terms of refinancing later on down the road, you should have no problem refinancing and still living in one of the units if you choose to do so.

See below link regarding lines of credit on investment/ multi-family LOC's

Investment Property Lines of Credit

Best of luck!