All Forum Posts by: Bryce Renicker

@Bryce Renicker I'm on my third house hack, all multi-family properties purchased w/ FHA loans. You'll need to refinance your FHA to conventional which will allow you to use an FHA loan again if your goal is to purchase a MFH w/ a low down payment. While it can feel contradictory to refinance to a higher rate, if you have the equity to do so and can drop your pmi it may balance out. I would also challenge you to not only think in dollars if you do refi to a higher rate but instead think about the opportunity cost of your existing FHA which is preventing you from purchasing a new MFH w/ an FHA.

Another option to look into if you don't want to Refi is to find a local credit union or bank that offers 90-100 LTV helocs which may give you the cash to put a higher down payment on a new owner occupied MFH. As others have mentioned make sure you are following occupancy requirements.

Lastly, and this was said before but get creative and don't think a MFH is the only way to house-hack. There are excellent opportunities for SFH w/ in law suites, apartments, ADU's, bedroom rentals etc. This will also come with much more favorable financing options.

@Bryce Renicker Go with 5% down conventional on a single family home. Don't get fixated on multis. Out of the 100+ house hacks we've brokered, about 10-15% are multis. The vast majority are SFRs, mainly due to financing options. You can always get SFR with an ADU or mother-in-law suite.

Hi @Bryce Renicker, glad you're moving so quickly! Financing is a good problem to have (vs. analysis paralysis...)

I would look into partnering. I have a couple other properties, so my cash was tied up in them. "I'm not poor, I'm just broke!"

I thought: I can provide the hustle, the analysis, the purchase, and ultimately the management of the property, and my partners could bring the cash to close, furnish, and upkeep the property.

We closed on the property on May 3rd, 2022, and operate it as a short term rental/house hack. My 2 partners provided $25,000 each, which provided the down payment, closing costs, and basic furnishing to the property. My wife and I brought in $4,000, just to put skin in the game and for reserves. 

My wife and a partner signed on the loan, so the DTI was not a significant opposition. The partners will get a guaranteed 10% cash on cash return per year, and get a portion of equity on reversion (sale or refinance of the property). We get a property, partners get preferred return, we all get equity. Win win situation!

We ended up putting down 5% down because it's an owner-occupied loan and strategy. Case in point: You don't have to be the only one in the deal. Leverage your partnerships, and if you have to put down 15% down, find a good enough deal where your partner will benefit from it!

Hit me up if you have any more questions. I'm based in the Denver, CO area. Best of luck!

@Bryce Renicker

Congrats on taking your first step.

First of all, no matter which loan product you use, you will need to live in your current home minimum of 12 month per FHA guidelines.
I was under the impression that you can get a 2-4 unit with a 5% Owner Occupied conventional. Please quote me on that, maybe someone else can clarify.
From my experience, if you are going the owner-occupied route... the lender is most likely going to grill you about your "intent to occupy" the new property. They will be looking for you to justify why the move would be an improvement. I.E. closer to work, more space (Growing family), better area etc.
If your current unit is 3bed 2 bath, it may be difficult to justify moving into a 4-plex with efficiency style apartments.

I managed to get away with this twice. Here's how it went down:
#1 duplex FHA 3.5% down. My unit was 2/1 (1200sqft) Refied into conventional after 1.5 years
#2 duplex FHA 3.5% down. My unit was 3/1 (1500sqft) Did Not refi.
#3 Single family home 3/2 (1400 sqft) with 5% conventional primary residence loan

Hope this helps.
cheers

If it's going well, you aren't going to do better by changing up. Best case scenario, you end up with new tenants that are equally fine but lose out on turnover costs and vacancy. Don't look for reasons to lose income frivolously. Besides, you'll be putting a lot of hardship on your tenants for no reason other than you want to . . . get new tenants that could be worse?

@Bryce Renicker

It sounds like they're solid tenants. If they're already paying market rent or even a little below I would try to keep them. Turnover costs can be time consuming and expensive. A low credit score is an indicator of fiscal responsibility but not the only determining variable whether a tenant is good or not. Also their credit score may have improved since the owner rented the unit. 

If their rent is quite a bit below market and you'd like for them to stay, let them know you'd be interested in having them stay but you will be raising the rent to market. If they don't want to stick around, no problem. Just advertise the unit at market rent and move on.

If they are paying at current market rate, I'd lean towards keeping them. You can note in your lease renewal the cutoff time for loud music and other stipulations you'd like to enforce as their new landlord. Otherwise if you do not renew them even though they are paying market rate, you'll have to spend money and time to get the unit ready for a new tenant. That could easily be 2 month of no rental income. Now if they are currently below market, then it'd make sense to look for a new tenant that'll pay the market rate.