All Forum Posts by: Andy X.

If you have cash, would you put down 3% (conventional) or 20% standard DP, and why?

Rookie investor seeking advice - 

with hot seller market, we find ourselves priced out of SFH purchase for ourselves, House hacking won't cash flow because we have young kids and school requirement becomes a sticky point even for MF units. BRRR require cash to compete with off market buyers and experience with contracting team. What's the best path forward? We don't want to do a deal for the sake of doing deals, and haven't found a strategy that cash flows in this market. Maybe just buy starter home to settle in for now, and invest later? Is renting/biding time the best option to move forward?

Rookie investor seeking advice: 

Owner occupied property, conventional loan, qualified for 3% DP, sounds like a great deal for starter home buyers with less cash, and allow for greater appreciation for house-hacking owners, but what are the catch 22?

Here are some of the downside I can think of: 

1) PMI costs, til 20% LTV

2) over-leveraged with larger mortgage payment (more difficult to cash flow) 

3) no refi until at least 20%

3) other?

just because you are allowed to put down less, doesn’t mean you should do it. Is the low DP suited better for a particular strategy? 

I am trying to see if it makes more sense to put down more so I am not as leveraged especially with the larger monthly payments and can cash flow sooner with larger DP.

Appreciate your thoughts/advice!

@Matthew Brill make sense.

We have 2 strategies now:

1) house hacking in MF - with hot market, MF is better to keep the mortgage payment low, and easier to cash flow when we move out. But my spouse is not a big fan (we have 3 kids), so my next option is

2) BRRR SFH and separately invest in MF as pure investment property - buy fix upper starter home, repair/upgrade, and move out after 1 year so it can cash flow at prevailing market rate, and then buy the next SFH. In parallel, we would also invest in multi family or student housing units so we can build out our portfolio.

Question - would you rather cash flow over equity or other way around? I am thinking with pure investment, I could pick property that's easier to cash flow because of no stringent school requirement, but appreciation may not be as fast if you buy somewhere more desirable with greater appreciation? but also pricer and dent the CoC in the short run.

@Austen Mueller just to confirm my understanding, the "market decides" meaning the stringent appraisal won't be able to match the market price due to the bidding in the established neighborhood, unless you up the cash to make the difference. If so, That makes sense. I plan to do conventional 3-5% loan instead of FHA so the PMI will come off at 20% automatically.

I am debating whether I should do MF or SFH for housing hacking with my young kids and school requirement.

Thanks nick. I’d love to talk to you about different approaches. Let me know when best to chat. Thanks

Hello BP community:

I am a rookie who's looking to do my first house hack with multi family units. I have a family of 3 kids so we need to pick a decent school district which up the purchase price. My question is - would house hacking be better with established neighborhood (Frisco, TX) or up and coming (Prosper, TX)? We are looking to do 3% down, owner occupied for 1 year and move on to the next but needs to stay in the same school district to minimize the impact to our kids when moving from one house to the next. We don't expect to cash flow in the first few years due to school requirement and hot seller market. In this case, would it be better to do house hacking in the established neighborhood because the rental value might be higher (quicker COC) vs up and coming with lower renter but equity build up could be bigger because of lower entry price.

Would appreciate your advice and pointers if I missed anything. Thanks.

Hello BP community:

I am a rookie who's looking to do my first house hack with multi family units. I have a family of 3 kids so we need to pick a decent school district which up the purchase price. My question is - would house hacking be better with established neighborhood (Frisco, TX) or up and coming (Prosper, TX)? We are looking to do 3% down, owner occupied for 1 year and move on to the next but needs to stay in the same school district to minimize the impact to our kids when moving from one house to the next. We don't expect to cash flow in the first few years due to school requirement and hot seller market. In this case, would it be better to do house hacking in the established neighborhood because the rental value might be higher (quicker COC) vs up and coming with lower renter but equity build up could be bigger because of lower entry price.

Would appreciate your advice and pointers if I missed anything. Thanks.

The established area is Frisco vs Prosper (up and coming) for those who might know the area in Texas 

Hello BP community:

I am a rookie who's looking to do my first house hack with multi family units. I have a family of 3 kids so we need to pick a decent school district which up the purchase price. My question is - would house hacking be better with established neighborhood or up and coming? We are looking to do 3% down, owner occupied for 1 year and move on to the next but needs to stay in the same school district to minimize the impact to our kids when moving from one house to the next. We don't expect to cash flow in the first few years due to school requirement and hot seller market. In this case, would it be better to do house hacking in the established neighborhood because the rental value might be higher (quicker COC) vs up and coming with lower renter but equity build up could be bigger because of lower entry price.

Would appreciate your advice and pointers if I missed anything. Thanks.