All Forum Posts by: Jacob Haskins

Hello BP'ers!

I am looking for some advice on my first investment. I am a real estate agent/investor in the Northwest Arkansas area, and back in July, I bought a SFH with plans to rehab and then later move out and rent it. I live in this home and originally planned to house hack, however life events happened and I had to pivot. I have currently passed the 6 month mark, so I am exploring options of either cash-out refinance or HELOC. I pay a pretty penny for PMI, and I thought it might be a good idea to pull cash out and start looking for another deal and take advantage of the equity since I extensively remodeled the home. Below are some of the investment details:

3 bed- 2ba, 1430 SQFT.  Purchase price $137k (around $95 PSF). Rehab $25k (my own money).

3.5% down CONV at 2.75% over 30 years. Mortgage payment is about $780 including PMI.

Several houses around me have sold recently from anywhere in the $130-175PSF range. A particular house on my street sold for $175 PSF about 3 months ago. It is a 3bed/2ba home as well (around 1350 sq ft) and a very good comparable in my opinion. My home is a little nicer with the rehab, but does not have a new roof or fenced in backyard like the other home. With this being said, I think my home is worth around $170ish PSF, but of course it all comes down to what an appraiser thinks. I would assume I could get 80% LTV on a cash out refi, and at $150-$170 PSF, I could easily recoup all of my rehab cash. However, I don't like the idea of being stuck in this house for another year if I cash out refi based on the primary residence loan requirements because I would like to be able to use that cash for another REI. I have a duplex house-hack in mind for my next venture.

What are you opinions/suggestions, Cash out refi or HELOC? Maybe I should consider something else?

I am currently under contract for a SFH for purchase at 137k ($95 PSF) and I plan to put in about 30k max of my own cash for repairs. I will be doing a Live in BRRRR-- its not a total rehab, but needs major major updates. I am going with a 3% down conventional loan.

I plan on living in this and putting a lot of sweat equity into the property and then do a cash out refinance after 6 months at 80% LTV to recoup most (if not all) of my money. My lender said the closing costs are included in the 80% LTV cash out. I will live in it for the required amount of time to satisfy the loan requirements and then move out to fully lease the property as a buy and hold investment.

@Evan Franco I will be doing the house hack strategy using an FHA loan. If I find a potential property, I just send the lender the property information, and they provide me with that the (estimated) monthly payments would be based off of the target purchase price. Of course, there are estimations such as home insurance and rates (because they fluctuate).

You could try shopping around at FHA lenders to go ahead and get approved, and they should be able to get you pretty close to what your estimated loan payment would be if you are not able to have success with the calculators.

Hope this helps

Yasmin, 

Centerton is a good area, of course all of NWA is growing. The appreciation, of course, in NWA is attractive as well.  

Things to consider would be age of the house, such as the big things like HVAC or the roof.  You are already expecting the property to be vacant when purchased, so you will need to account for holding costs, but will other big costs be associated in the near future such as these types of repairs --inspections can really be life savers.  You might also want to look into different types of insurance whether it be umbrella or some other type, which is another added expense.  

Also, have you considered if you are going to manage it yourself or have a company do it (as well as with the repairs)?  You can spend a lot of money on little service calls that eat away pretty quickly at a cash flowing property. 

I know BP has calculators (and tons of quick forum reads) that might could help when it comes to running the numbers on a property such as this.

Great read.  I am starting to get into house hacking myself, however I have fears of finding roommates that I would be happy with to follow the rent-by-room strategy. I am looking to purchase a single family and live in the mother-in-law quarters and rent out the main house via long term rental or locate a duplex.  

Tell us more about your MLS deals. Do you find them yourself or have an agent that understands your strategies? I have been looking for a home to house hack on the MLS for months now, and it just seems like the cash flow would probably too tight unless putting down a significant down payment to get out from under PMI.