House Hack a Quad-Plex New Build? Or Just buy a quad-plex and force appreciation?

[Matthew McManus]

Hi, I'm thinking about how to start off with real estate and this seems like my bet.  Which one should I do and why?

1) The Game Plan for Quad-Plex New Build: Pull out a one time close FHA Construction Loan. This packages the purchase of the land, finances the build, and all other expenses involved for the process. I would then rent out 3 of the units and live in the 4th unit. This would pay for the mortgage, maintenance and all that and give some cash flow back.

My question is can I do a cash out re-finance on this after 12 months and then take the funds to do a 1031 exchange? 

Next, I would then force appreciation into a purchase that needs some work and BRRRR from there? or just keep building like the first process?

P.S. I grew up around construction and my father owns a company. So I'm familiar with a lot of the construction portion. I would probably do the foundations and roofs myself, and hire a builder for the rest of the project.

2)    OR   do this: 

Buy a Quadplex or duplex that needs some cosmetic stuff done and force appreciation. Carpet, paint, siding, landscaping or some curb appeal mayb??? And then do the cash out refinance? or 1031 exchange?

Maybe if someone can summarize how to go about this?

Thanks 

[Julien Jeannot]

@Matthew McManus

Both options can work. 

1. Figure out your end goal first, then work your way backwards to today.

  -Assess risk tolerance

  -Assess level of involvement, time, and cost requirement to rehab

2. Play out the numbers in each scenario over 2-5 years. Don't forget the holding cost in the build option.

3. Don't worry about the 1031x prior to acquisition in this case. I doubt you will have enough equity in 12 mo to worry about diffing capital gains on a house hack after selling costs.