House Hacking 1st Property!

[Tiffany Johnson]

Hi All, 

I'm from the Memphis area and want to start investing in real estate in my area. I've did a lot of reading and watching YouTube videos on strategies to getting my feet wet and house hacking seem like a good way to get some skin in the game. I plan on using FHA loan 3.5% down to get started with a 2-4 unit multi family.

At that year Mark I would put both units up for rent. Then I’ll like to do the process again with another 2-4 unit property. Any advice on how this could be done if I wanted to repeat the process? 

[Lawrence Potts]

Hey @Tiffany Johnson, that’s an excellent way to get into the real estate game! House hacking has been one of the best decisions I’ve made in my life.

There are a few things to consider with this strategy:

1. As mentioned earlier, there’s a self sufficiency test for triplexes and 4plexes that can throw a wrench into financing. Depending on if underwriters will take current rents or market rents, it can change how much a lender is willing to lend.

2. Typically you can only have one FHA mortgage at a time. The work around is to refinance your FHA mortgage into a conventional once you hit 25% equity (75 LTV). Then you have your open FHA back and you can buy another multifamily. If you find something where you can force equity (sweat equity through rehabbing), that may help you hit that mark sooner.

3. FHA just changed their refinancing rule to 12 month seasoning period. Once you hit the 12 month mark and you have the equity, you can start the refinance process. Aka seasoning.

It’s still an AWESOME strategy and 100% doable! As the market and lending changes, you just need to pivot and learn and be creative. You got this! Find a lender that knows exactly what you’re trying to accomplish and they can get you connected to an agent that can find the right deal and can close 👊 @Grant Schroeder has helped quite a few investors in TN, I highly encourage you connect with him since he can get you connected to investor-friendly agents as well.

Hope that helps!