Buying a primary residence that is also a first investment

[Anna Marcotte]

Good morning and happy Wednesday,

Quick background before we get to the dilemma: I am 27 years old, I work as a full time nurse in an ER, I received a small inheritance when my grandma passed away of 100k. I live in Point Pleasant/brick, NJ (the jersey shore area). I currently rent an apartment with my s/o and my half of the payment is $750. My goals with REI are (as mostly everyone says) gaining financial freedom, being able to leave the traditional w2 job, and be in real estate full time. I am also in the process of getting my real estate salesperson license.

I have been going back and forth with the decision to either a) buy a primary residence as my first purchase, or b) continue being a renter and start acquiring investment properties while my cost of living is low. The *best* choice would be to buy a duplex/multifamily property, however they are extremely hard to find where I live. 

Through weighing my options, it seems like my next best option would be to BRRRR a primary residence and with my cash out refi I can start investing in other properties. Therefore I have a home of my own while also being able to continue on my investing journey.

My questions for the experienced:

a) Would the BRRRR method work similarly for a primary vs an investment property (main difference is I'm the renter)?

b) Even though I am starting with a decent capital, would getting hard money lender or 203 b loan be a smart move so I don't eat through my entire 100k? 

c) Last question, I've seen a lot of benefits from starting a LLC and buying properties under it. Could I also do that for a primary residence or would it not serve the same purposes as starting one strictly for investment properties?

Sorry if this was long winded. I have weighed out a lot of options, done research, but I always like to get opinions from those who have experienced this situation or something similar. Thank you in advance!

[Scott E.]

First of all, I'm sorry for the loss of your grandma.

You ask some good questions about your circumstances.

a) Would BRRRR method work similar for primary vs investment - Yes. People use this strategy on both primary residences and investment properties. We're talking everything from a single family home to a 100 unit apartment complex

b) Even though you're starting with decent capital, would getting a hard money or 203 loan be a good move - Yes. In my opinion, hang onto as much of that $100k as you can. My strategy as long as I've been doing this is to put as little of my own money into all of my deals, and that strategy have been very helpful in terms of scaling my business.

c) Should you start an LLC - You're not going to be able to get a regular conventional or FHA loan if you own your property within an LLC. You'll need to buy it in your name. Some people transfer to an LLC after purchase, but there is something called a "due on sale clause" to be concerned with. Consult with an attorney on this one.