Househacking a Duplex while keeping current home as rental

[Jenn Chism]

Hello. I am looking at purchasing a duplex to house hack as an ideal way to get started in investing. I’d live in one side and rent out the other. I currently just have my primary residence and am wondering if I should try to keep it as a rental, if I can get approved for the duplex mortgage while still owning this home. I’ve been told that could be possible if I get a signed lease on this home before I apply for a mortgage on a duplex. I also had a fairly recent hit to my credit that may require some improvement first, and my current income is not consistent.

I don’t have a specific question, but since I don’t know what I don’t know, would love to hear any professional/experienced advice or input about this idea and best way to get started. TIA!

[David M.]

@Jenn Chism

Lenders can/will qualify you for a purchase loan on the expected rent schedule.  You don't need a signed lease.  However, this policy/approach does seem to vary lender to lender.

Whether to rent or sell your current residence is mostly a matter of "numbers."  Does it make for a good rental in your market?  How it appreciated much and how long have you lived there (where it might be better to sell and take the gain tax free with the sec121 exclusion)?   How will your overall income work out in either case?

Also, will you want to live in the duplex and its neighborhood?  Do you like your current home?  Do you mind moving?  Will you live in that duplex "forever?"  What is your "exit strategy" or just long term goal?

On another note, I am guessing you don't have sufficient funds to buy the duplex and rent out both sides?