What’s my next move?? 2 choices
One year ago I purchased my first rental, house hacking a 4000 square foot duplex. I am looking into getting my second one here soon and need advice. I believe I have two options.
Property Info:
Purchase Price: $365,000
Current Loan: $329,000
Interest Rate: 5.7%
Mortgage:$1900
PMI:$130
Insurance:$157
Taxes: $320
Current Rent Left: $1200 (Market $1400)
Current Rent Right: Owner Occupy (Market $1800)
1. Option 1. Save and pay down mortgage to 20% equity ($292,000). This would be about $40,000 and would take approximate 8 months to accomplish. On top of the 8 months I would need another year or so to save approx. 30k for a down payment on the second property. Bottom line would have me cash flow $800-$1000 after all said and done.
2. Option 2. Refinance to a conventional loan.
Use approx. 6 months to save for down payment and look for the next property to house hack. Bottom line this would cash flow around $400 a month. Much less than option 1, but much quicker timeframe.
Option 1 because the numbers are too tight with Option 2. You calculated $400/month, but did you account for repairs and vacancies?