What would you do with 50K? BRRR, FHA and hold, House hacking?

Question

I'm just starting up in real estate and I'm in the CT area where the medium house is approximately 365K. I'm just finishing up grad school and moving to Hartford, CT for a new job. I have about 50K in funds.

I was thinking about doing a FHA with 3.5% down and living there for a year, then moving out and converting it into a conventional loan to get another FHA. I heard this strategy is complicated since I need to have a reasonable excuse to get a second FHA after converting to conventional (different job, emergency, etc). Is this the case? My other plan would be to save up another 50K and then use a hard money lender to do a rehab. But, that would put me out of the market for a long time and I would have to rent.

Any input or ideas would be highly appreciated.

Bob Okenwa · Answer

House hack 100% if I were in your shoes. Easiest way to get started is to leverage your advantage and being able to move yearly can help build a portfolio with little money down.

Moving out after 1 year is not complicated. You'd just refinance and go about your business since you fulfilled the 1 year requirement.

Samuel Eddinger · Answer

@Alex Molina - I'd reach out to some loan officers and talk with them.  There are ways you can have more than one FHA loan.  If you talk to them first, it can help you formulate your ideas for next steps!

As always, reach out if you want to discuss more.

Michael Doherty · Answer

@Alex Molina definitely house hack. If I could re do it I would look to house hack a 3-4 unit and really take advantage of that 3.5% down opportunity (or any low down product available to first time home buyers). I only bought a 2 family and wish I had done 3-4 units. Keep in mind inventory is low in Hartford county and FHA loans/offers are not ideal for the seller (as opposed to conventional or cash)  so you will have to be competitive in other ways when making offers. Let me know if I can be of any further help.

Justin Hammerle · Answer

@Alex Molina - I'm not sure why you would need any kind of excuse to use an FHA loan; as long as your income qualifies there would be nothing restricting you from purchasing a SFH or MFH up to 4-units with an FHA.  As long as the conventional loan is in place and you refinanced out of the FHA, you are free to use it again to your discretion.

Lawrence Zhou · Answer

You should househack with a FHA mortgage with 3.5% down.  I had two clients buy multifamily properties in Waterbury, CT this year.  You may want to check that area out too.  If you want a realtor contact in that area, please DM me.  Happy to help.

Brandon Rush · Answer

Hey Alex,

I would absolutely recommend you start with a house hack. Don't get too caught up in the weeds about refinancing asap and all the other stuff. The simple fact is you will be able to purchase a property with a low down payment and live there as well. This will yield multiple benefits such as:

* Freeing up funds for other projects as you will only need to put down 3.5%* Lowering your living expenses compared to if you were renting or if you had purchased a single family (assuming you house hacked a multi)* It's an easy barrier of entry to becoming a real estate investor* The process is repeatable if you plan it out correctly* It's like being a landlord on training wheels as your risk is lowered since you would be living there

So many benefits to house hacking and for many investors, it should be the baseline of their investment portfolio. If I can help out in any way, please reach out.

Good luck on your journey!

Hamp Lee III · Answer

Sometimes, the best decision is the easiest. You're starting a new job, so maybe a BRRR isn't for you right now.

You have a FHA loan you can apply for as well as NACA:

Neighborhood Assistance Corporation of America (NACA)

NACA was formed in 1988 and provides an affordable option for potential first-time buyers:

✅ No down payment

✅ No closing costs or fees

✅ No mortgage insurance

✅ No consideration of credit score

✅ Below market fixed interest rate

There are several requirements to be eligible, starting with attending one of their workshops.

https://www.naca.com

I wish you all the best.

Justin Hammerle · Answer

yes correct.  There are cases when you can have multi FHA loans out but I think that may be what your thinking of in terms of restrictions.  but in theory you can refi out of an FHA loan and use it again without any restrictions.

Jaron Walling · Answer

Student loan debt? Personal loans? Car payment? Anything holding you back?

$50k is enough to start the journey but preparing the other aspects is equally important. House-hacking is the logical choice given the market conditions and lack of REI skills. I'd avoid the BRRRR strategy until you understand, swing a hammer (at least once), and know how to calculate rehab numbers.

Alex Molina · Answer

Got it, so I just have to convert it into a conventional and I could get another FHA loan without reason? I just can't have two fha loans at the same time, in that case a reason is needed.

What would you do with 50K? BRRR, FHA and hold, House hacking?

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