All Forum Posts by: Dave McCulley

So in order to get out of the FHA, I would either have to have 20% equity and do a investment mortgage or refinance into a conventional mortgage where I would need to live another year, and after that I would satisfy the 1 year of still owner occupied at which time I could use the FHA again for another property?

I am looking to get into a multi-family house hack next year and originally I was looking at duplexes. I have now turned my attention to 4-plexes. I am in the south Texas area. I want to try to get in with as a little down as possible using the 3.5%. I know this comes with PMI and MIP so monthly will be higher than without, but lowers the barrier to entry significantly.

Does anyone have any info on what other barriers there might be to entry? I am looking at new construction, going to live there for a year and then change to a conventional and do it again.  I know it would be better to get one and build equity into it, but I'm not ready to go that far on the house hack.

What are current interest rates?  Trying to get some info early so when the times comes I'm ready to go.

If it's new construction, obviously there won't be tenants so I would not be able to use the 75% of monthly expected rent? or would this still be applicable based on what I'm expecting to charge?

Anyone with duplex, triplex, quadplex I would love to hear from you.

So, the problem I would run into here after reading more would be in the refinance of my current owner-occupied home. If I were to refinance right now out of my FHA into a conventional loan, I would need to live in it for another year to meet the requirements and not be committing mortgage fraud if I were to immediately rent it out. Unless I applied for a rental mortgage.

That could be a blessing as a year of saving, paying down the loan, appreciation and building more equity would be good. Then I would be able to use an FHA or another conventional at 3.5 to 5% to purchase the duplex as my primary residence, but gain rental income from the other side and be collecting rent from my current home as a rental.

Either way I have to refinance out of the FHA as that requires you live there if I want to move into the Duplex. Am I misinterpreting what facts I've read here or are those my two options?

1) Refinance to conventional, wait a year, purchase duplex with FHA or conventional.

2) Refinance to rental property, immediately purchase duplex with FHA.

Any help here would be appreciated.

@Jon Schwartz - I've only talked to one lender so far, but they informed me that refinancing out of an FHA and then getting another one right away is not allowed. I've also been told this isn't true. So after that set back I began looking at refinancing my current home to a 15 year note which would drop the interest rate and remove PMI, but my monthly payments go up about $300 ($150 because my house hack-mate pays 50% of all bills).

They also informed me that minimum 20% down for a duplex right now -- not sure if that's soley for rental property or not.

@Kiera Underwood had a good idea of just putting 5% down which isn't that much more then the 3.5% with an FHA and that way I wouldn't have to get out of my current one.

Like I said, 5%down might make the payments a little high.  The current properties I'm looking at run between $380 and $450k according to Zillow.  The $450 are still being built - would be brand new move in and the the lower priced ones are about 5 or 6 years old.

I'm wondering if I should refinance the SFH into a 15 year to get rid of PMI - slightly higher payments - but still possible cash flow if rented out, but would be paid off much quicker and just do a conventional on the duplex to get started there.

Thoughts from y'all as well as @James Bradin would be appreciated.

Thanks

Thank y'all for the responses.

So I am currently house hacking my SFH and putting that income in an account to purchase my first duplex. I am interested in it for all the reasons both of you mentioned. My current house hack partner is going to move in with me on my side and I would rent out the other. I don't think I would meet the 1% rule for rent based on what I've seen, however, with one side rented out AND house hacking my side, I could possibly cash flow and for sure be paying less than what I am now and FOR SURE less then just owning a SFH outright by myself. As you said, with appreciation and pay down, it seems like it would be a good investment to get into.

Like I said before, for this project, I'm looking at newer duplexes that don't need any fixing up because I am going to be living in one side for a while.

My idea was to refinance my SFH out of the FHA loan and use the cash out refi to purchase a duplex with a new FHA (although with only 3.5% down the payments would go up signficantly), begin renting out the SFH and house hack the duplex. Then in a a year, or 2 move out, have 3 doors with equity building in the duplex and begin or continue BRRRing.

I've been told this isn't possible for numerous reasons so I'm looking at other avenues of a traditional loan for the duplex (but putting more down is where I run into my issue) - which is why I'm saving every bit of house hack rent, overtime, second job income to put towards rental investments right now.

I'm almost finished with "The Book on Investing In Real Estate with No (and Low) Money Down" and I have finished "Rich Dad, Poor Dad." as well as my first book on the subject, "The Book on Rental Investment Property."  I have plenty more on the Kindle ready to go, I listen to the BP Podcast, and have seen the last few webinars as well.  I'm fully committed, just trying to get into the duplex game.  I really appreciate any other insight you guys might have and Jon, I would love for you to run your spreadsheet and see what it says.

Thanks

Dave

I am looking to get out of my current SFH and into a duplex to house hack. I know cash flow is very important and getting the best deal is the most important thing.

If I break even of have to pay a little in mortgage by renting out one side and house hacking the other all while building equity in it, is this not a good idea since it's not cash flowing yet?  

I want to get into duplex owning, but as far as living in one, I don't want to be in a class C neighborhood and would have to pay more.  

Anyone have any expertise in this area?

I am currently looking at refinancing my FHA mortgage and looking at different options. It's a 30 year fixed 3.375% I wanted to either look at a HELOC to pull some money out and use to purchase my first rental, but lately I've been thinking about another option.

I was thinking about refinancing my FHA into a conventional loan at the same or hopefully lower rate then I currently have in order to turn the property that I currently owner occupy into a rental property. I would want to use the cash out refi money if that's possible or just a new FHA loan to purchase another property to live in - possible duplex or triplex - to live in and rent out the other side.

The Duplex I'm looking at is new, it would not need any repairs so I don't know how much it would cash flow to begin with, but I would be renting one side and house hacking the other.

I am looking for anyone who may have done this.  Does this sound like a solid plan?  How do I do the numbers for my current home to see if it makes sense to rent it out?  Any help would be appreciated.

I am in San Antonio, TX getting ready to jump into the real estate investment property arena and after reading The Book on Rental Property Investing and reading some forums I think my best way to enter is through home equity. My plan was to use equity in my current home which I'm house hacking currently to purchase a property and use the BRRRR method to turn that into my first deal then pay back the equity after refinancing.

Does anyone have any advice on HLEOC vs Home Equity loan for this.  I've read on both and was wondering if anyone has any experience of one vs the other in regards to my situation.

Thank y'all!