STOP Paying Rent: Live For Free

[G_Alexander]

"FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only one owned using FHA mortgage insurance."

That is a direct quote from the fha website. Just wanted to run this by you and ask, does this mean that when I go in an talk to a mortgage broker that I should give the impression that I plan to permanently live on the property? If I mention that I plan to move out eventually will I be denied the loan?

I am ITCHING to do this and don't want to screw it all up!

Investment properties are those you don't occupy ("true" investment). That FHA quote only applies if you don't intend to occupy the property, which is illegal. I am 100% sure the FHA allows you to obtain a loan on a 1-4 unit property if you truly will owner occupy. Hundreds of thousands of people have done this. My loan never would have made it through Bank of America underwriting if it wasn't possible.

As far as timeline goes...you must intend to occupy the property for at least 1 year. After that you can do whatever you want. And don't forget, you can definitely have a roommate to increase your cash flow.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Lathan]

Investment properties are those you don't occupy ("true" investment). That FHA quote only applies if you don't intend to occupy the property, which is illegal. I am 100% sure the FHA allows you to obtain a loan on a 1-4 unit property if you truly will owner occupy. Hundreds of thousands of people have done this. My loan never would have made it through Bank of America underwriting if it wasn't possible.

As far as timeline goes...you must intend to occupy the property for at least 1 year. After that you can do whatever you want. And don't forget, you can definitely have a roommate to increase your cash flow.

Thanks for clearing that up. I have no issue at all with occupying the property for at least a year.

I'm going to see if I can find a duplex (don't think I can afford anything more but I'll look). I have about 6k to work with as of right now. I noticed you said you brought 5900 to the closing table. Do you mind saying what exactly that entails?

From what I have gathered it seems that the things to take in to consideration are the down payment, mortgage payment, mortgage insurance, property taxes, and 3-6 months mortgage payments in reserve. Not to mention some sort of buffer for routine maintenance/repairs. If I had to guess I would say you had more than that $5900 saved up before you did this?

Assuming 6k is not enough to do this... I have a friend/mentor I recently met with and plan to meet with more often. He knows I plan to do this fha thing. Do you think it would be worth his time to help me with this first property? How would one structure it so it is more appealing to an outside investor? Would he help me with some of the upfront costs and then instead of banking the cashflow at first I just pay him back each month(plus interest maybe)? I don't know I'm just trying to think outside the box.

Edit: After reading more on the fha website I may just wait until next year to do this. It says they usually require two lines of credit and also it says fha recommends having a satisfactory payment history of at least one year. I only have one credit card and have only been building my credit for 8 months. In four months (a year) I will apply for another credit card and also by that time I will have more money saved up. I don't want to apply and get denied the loan.

 

[Envision]

"FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only one owned using FHA mortgage insurance."

That is a direct quote from the fha website. Just wanted to run this by you and ask, does this mean that when I go in an talk to a mortgage broker that I should give the impression that I plan to permanently live on the property? If I mention that I plan to move out eventually will I be denied the loan?

I am ITCHING to do this and don't want to screw it all up!

You need to have the intention of living in the home for 1 year. After that point you are allowed to move out but can continue to live in it if you choose.

 

[NormP]

Refer back to post #1, and follow the hipsters. These are the areas that are just "fringe-y" enough to get you the returns you are looking for.

I noticed that part in your first post, and it's interesting that you wrote that. I have been taking a detour and driving through a neighborhood on my way home from work because it had caught my eye when I drove through once trying to take an old shortcut through town. It's pretty rough but it has a fairly new and very popular microbrewery right at the end of the street. Recently a restaurant of some sort opened up across the street from that. And one street over many of the older, bigger houses that had formerly been rundown wrecks are starting to be bought up and remodeled by.......hipsters. At least they're good for one thing.

So I had been interested in this area for 5-6 months thinking roughly along the lines of what you've described. You've just laid it out in much more detail than I have thought of or had experience with. Thanks for the information. Very interesting.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MEAH]

this is going to be quite difficult to achieve if not impossible if you are newly self employed I would gather

 

[Swiss]

@G_Alexander - Thank you so much for starting this thread man!

Does it really matter if this is Fastlane or not?

The average American spends ~35% of their annual income on housing.

That's a lot of money one could use to build a Fastlane business if REI wasn't their cup of tea. It would also free them of an obligation of TIME they must spend coming up with the money to pay for their housing.

Some people on this forum that are farther along than others may not need this but, I feel like OP was targeting those who are relatively new. Who don't have a solid location to branch out into whatever Entrepreneurial endeavor they choose.

Just my two cents, now onto the goods!

The Military is PCSing me at the end of the month and I'm rooming with friends for cheap, initially. I'm going to use their place to crash while I survey the area and get a feel for the city.

Can't wait to put more of this into practice.

I did some research and for those who are in the military. You can still use a VA loan to purchase a 1-4 unit home just like an FHA loan, except in this case it's 0% down instead of 3.5%. More cash in your pocket.

A big difference that needs to be addressed is that there IS a cap for how much the VA will guarantee on your loan before you must provide a down payment.

The Basic VA Loan - The VA will "Guarantee" $36,000 as a set standard, though in reality they generally guarantee $144,000. If the loan is for less than $144,000 The VA will guarantee 25% of the actual loan.

A loan of $136,000 * 25% = $34,000 covered by the VA.

Not the $36,000 said originally.

The Bonus VA Loan - Also called the Secondary Loan.

In most counties, what this means is that you can be approved for a loan of $417,000 before being required to provide a down payment. This is because the VA will guarantee a maximum of $104,250 or 25% of the $417,000 loan. This is NOT based off of your actual loan.

If the loan you are being approved for is in any of these 46 Counties, your numbers will be different due to the expensive area. If you take this route, do your research.

Their financial "backing" is what gets you the no down payment as well as the other benefits you receive using the VA loan.

Also for those Military who aren't aware. You can use a VA loan multiple times. This is a little bit more technical with things like (IRRRLs) and such, there are also additional stipulations involved, but it's nothing a Google search can't shine some light on if you're willing to put in the work.

The area I'm moving too has a limit for FHA loans on a 4-unit of 800k. I couldn't afford the down payment for that using a VA loan. That is my understanding as of now.

So Hell, I may not even use a VA loan. We shall see.

I'm going to do more research and get in contact with the people graciously mentioned by others, (real estate brokers, mortgage brokers, etc.) I'll let you guys know what I find.

Sorry for the overly-long post, just trying to add some value!

-Swiss

 

[FeaRxUnLeAsHeD]

Curious question:

Can you get a 'J.O.B' and work it for a few months, maybe even a year, just to get the qualification for the mortgage, and then quit the job and be good?

What i mean by 'be good' as, once you have the mortgage by proving you have a stable income with the job, you can quit the job and as long as you can make payments you're fine?

I'm thinking in terms of having a business you're making revenues from, but has under 2 years of tax-proven income, and you just want to get the approval so you go grab a temporary job, get the FHA mortgage, then buy the duplex and rent it out?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[BlakeIC]

Edit: After reading more on the fha website I may just wait until next year to do this. It says they usually require two lines of credit and also it says fha recommends having a satisfactory payment history of at least one year. I only have one credit card and have only been building my credit for 8 months. In four months (a year) I will apply for another credit card and also by that time I will have more money saved up. I don't want to apply and get denied the loan.

Gee dang it if that is true, i don't even have 1 line of credit (I turned 18 a few months ago)

It's 4:09am here i need to get to sleep otherwise i would be finding out what i could about that right now


edit: And man i have learned so much in this thread tonight

thank you @G_Alexander

 

[Cesare]

FHA mortgage? I'm from Germany, so...

 

[MKHB]

Fastlane brothers and sisters, I am here to show you the light should you so accept to see it. I’d like to offer some advice from my experiences and to share the wealth of living rent free.

This is not a revolutionary topic, and I am not a revolutionary human. Living rent free has been done by many. Living rent free with cash flow has also been done by many (including me). It is easy. It will likely end up costing you less than $10,000 (I only brought $5,900 to the closing table on my first property). It’s a no brainer move for those of you who are hungry and ready to forge your own path in life. Ever since I posted about my first 3-flat, members have reached out to me asking what type of financing I utilized, where I began, what books I read...this thread is a basic answer to many of those questions.

This thread is not intended to make you join the apartment investor Fastlane (although cash flow has severely addictive qualities, just ask @SteveO, @AroundTheWorld, @zen*******, @RealOG, @CashFlowDepot, etc.). No, this thread is here to help you make one simple move that can stabilize your life as your pursue whatever Fastlane you choose. Stop paying the man each month (me) and start focusing on your goals. I hope that this thread will help even JUST ONE person on here to live without the constant cloud of having a rent / mortgage payment every month.

No longer will the excuse of “I have too many bills to pay to quit my job and enter the Fastlane full time” remain valid. We are building your shelter. We are building your money tree. We are building the castle from which you will wage your war.

This thread is targeted for those of you who currently have:

• A stream of income from your lame J.O.B., from your own business (need 2 years of 1099 history for this to work if self-employed), from your full blown Fastlane venture or from your sugar daddy/ momma (whatever) and
• Currently do not have an FHA mortgage

We are going to learn how to purchase a duplex, 3-flat or 4-flat with as little as 3.5% down that will cash-flow and pay for itself.

Are you tired of paying your landlord your hard earned wage each month and having nothing to show for it? Do you wish you had a money tree in your backyard? Good. Let’s rock and roll.

Let’s break down what you will need to do into a simple list:

1. Contact / engage a mortgage broker​

1. 1. Hop on Yelp! and search for the best mortgage broker in your city. Pick one who has high remarks in their reviews. Don’t get bogged down searching for the perfect mortgage broker. There are thousands in every city. Call a few and pick the one that pays attention to you (answers quickly, calls you back quickly, etc.)
   2. Obtain a mortgage pre-approval (broker will walk you through the steps) for an FHA mortgage (broker will walk you through all the documents they need you to sign)

i. An FHA mortgage is a tool that first time home buyers who will be owner-occupants (move into the property) can utilize

ii. Broker will run your credit (FHA minimum score threshold is around 550 I think, so hopefully you are a responsible, bill-paying-son-of-a-b*tch)!
​

3. Once you are pre-approved, the mortgage broker will get you the loan you need once your real estate broker (step 2) finds you the property you want. They will charge you a fee at closing (likely 1%, or 1 “point”) which can be rolled into your loan​

2. Engage a real estate broker​

1. 1. Same thing, head to Yelp! and pick based on reviews. Call a few and tell them what you are searching for:
      
   2. Tell your broker you want to look for owner-occupant Freddie Mac (HomeSteps), Fannie Mae (HomePath) properties that are between 2 to 4 units (our ideal number is 3 or 4 units)

i. The reason we like Fannie and Freddie foreclosures is because owner-occupant buyers have a 14 day window to bid on these properties before investors. This restriction is intended to keep real estate investors from driving up the price of houses on the home buying citizens of America. Which is good for you, Mr. first time home-buyer!​

3. Look at some properties (criteria)​

1. 1. Check out properties you think fit the size criteria, and that are in a good area of your city. Try to stick near big transportation hubs (trains) and try to pick an up-and-coming neighborhood (read: follow the hipsters)

i. Hipster neighborhoods are the next places that will “turn” economically in a given city, and are great spots to realize cash flow​

2. Hop on PadMapper.com (good for checking rents in an area) to see what kind of rents you can expect from the property you are looking at

i. Example (all made up): 3 unit, Seattle with all units having 2 beds 1 bath.

• Rents in the area are $1,000 per unit on average (same size, quality, finishes, etc.)

3. Take the gross amount of rents and apply a safe buffer of 50% for expenses:

i. 3 units x $1,000 = $3,000 per month gross rents x 50% = $1,500 expenses

• This means you keep $1,500 in your pocket (your “NOI” or Net Operating Income)

4. Figure out a buffer for your mortgage (and any possible cash flow)

i. If you paid $200,000 for this property @ 4.25% for 30-years and 3.5% down, your monthly payment would be ~$1,500. Voila, no mortgage

• This doesn’t take into account that most months you will not hit 50% expenses. Some will be 0% (very cash positive), some will be 150% (cash drain) so be sure to keep reserves set aside from the good months for when the bad months come around

ii. You make your money when you BUY not when you sell​

4. Pull the trigger!​

1. 1. I would recommend looking at 15 to 20 properties with your agent and getting a good feel for the market. You will start to recognize trends.

This whole process will only take 2 months or so and sets you up for months of lower-stress productivity. Stop subscribing to get rich quick mindset. Good things require process and take time.

If this interests you, just start calling people! Just because you talk to brokers doesn’t mean you HAVE to buy something. Good brokers will hold your hand through the whole process. If a property was recently rehabbed or isn't more than 10 years old...then use 40% for expenses when you do your quick-check math. If a property has under market rents...don't pay for what the property "COULD" be operating at. Pay what it is currently worth knowing that when you increase the rents you will cover your mortgage and realize equity appreciation. Just use common sense.

If you think you can spend your resources in a better place, or make the “jobless” leap without buying your “castle”, then please do. This thread is for people stuck in a job or who are too timid to take a leap of faith without first building a small form of support.

I did not even touch on the fact that you can utilize an FHA 203-k loan, and get rehab construction rolled up into your loan amount, or the larger fundamentals of apartment investing, but that is because I am not trying to teach you how to be a guru here, I am simply providing a path to ease your monthly financial burden.

If you are going to make this move and want to hit a home run, DO YOUR RESEARCH and take a dive down the rabbit hole. If you don’t want to spend a ton of time learning how to hit a home run, that’s alright because you must remember that singles, doubles and triples (pun intended) still put points on the board in the long-run. Just get moving NOW!

Read some apartment investing books over the course of a few weeks and then plan your path to freedom carefully. Don’t shoot in the dark, but make sure you do in fact shoot. No deal will ever be perfect. The timing will never be right. Pull the trigger now.

Note: I am not a financial advisor or a lawyer and this thread is purely an opinion that I hope you can draw from. Purchase property, or invest, at your own risk.

PS. Buy in the winter months if you want to get lower pricing and less market competition.

G you are one smart young dude.

We had a BBQ over the 4th of July about 30 kids (my sons age early & mid 20's). Just for S&G I went around to each one (smart college educated types) and asked about their house buying plans, only 2! Yes, only 2 out of over 30 planned to buy homes. They spewed out various ridiculous, anecdotal stories and crazy theories about how things are different, you can't make money in real estate, unclogging toilets...blah blah blah

All drove newer cars, all had the IPhone XX whatever the newest phone is, all had significant jobs, disposable income, rent payments around 2k.

I said to them, given this trend do you know what is going to happened to your rent over the next 3-5-10 years? Or that a $2,000 a month rent payment is roughly equivalent (depending on your effective ) to about $2,800.00 per month, or a $500,000 home. They looked at me like I just escaped the old folks home.

I told them I bought my first home with a 30 year of over 9% and made every blunder, bought at all the worst times, made all the wrong decisions and yet 95% of my net worth is still real estate.

But not to just pick on young people, a few years back I bought a shit box in Huntington Beach CA and got the same story from friends and family my age. What are you doing, you already have real estate, it's noisy here, there is no parking, the economy is unstable, we could have a double dip recession.

And, after getting in this home finding out it needed way more improvement than I thought, they all gave me the I told you so look and said "What are you gonna do now?"

My answer, "buy more."

We don't even live in that house anymore...moved out couldn't afford the rent $2,800.00-we have two dumb a$$ millennials (financially dumb but great kids) renting it.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MKHB]

Fastlane brothers and sisters, I am here to show you the light should you so accept to see it. I’d like to offer some advice from my experiences and to share the wealth of living rent free.

This is not a revolutionary topic, and I am not a revolutionary human. Living rent free has been done by many. Living rent free with cash flow has also been done by many (including me). It is easy. It will likely end up costing you less than $10,000 (I only brought $5,900 to the closing table on my first property). It’s a no brainer move for those of you who are hungry and ready to forge your own path in life. Ever since I posted about my first 3-flat, members have reached out to me asking what type of financing I utilized, where I began, what books I read...this thread is a basic answer to many of those questions.

This thread is not intended to make you join the apartment investor Fastlane (although cash flow has severely addictive qualities, just ask @SteveO, @AroundTheWorld, @zen*******, @RealOG, @CashFlowDepot, etc.). No, this thread is here to help you make one simple move that can stabilize your life as your pursue whatever Fastlane you choose. Stop paying the man each month (me) and start focusing on your goals. I hope that this thread will help even JUST ONE person on here to live without the constant cloud of having a rent / mortgage payment every month.

No longer will the excuse of “I have too many bills to pay to quit my job and enter the Fastlane full time” remain valid. We are building your shelter. We are building your money tree. We are building the castle from which you will wage your war.

This thread is targeted for those of you who currently have:

• A stream of income from your lame J.O.B., from your own business (need 2 years of 1099 history for this to work if self-employed), from your full blown Fastlane venture or from your sugar daddy/ momma (whatever) and
• Currently do not have an FHA mortgage

We are going to learn how to purchase a duplex, 3-flat or 4-flat with as little as 3.5% down that will cash-flow and pay for itself.

Are you tired of paying your landlord your hard earned wage each month and having nothing to show for it? Do you wish you had a money tree in your backyard? Good. Let’s rock and roll.

Let’s break down what you will need to do into a simple list:

1. Contact / engage a mortgage broker​

1. 1. Hop on Yelp! and search for the best mortgage broker in your city. Pick one who has high remarks in their reviews. Don’t get bogged down searching for the perfect mortgage broker. There are thousands in every city. Call a few and pick the one that pays attention to you (answers quickly, calls you back quickly, etc.)
   2. Obtain a mortgage pre-approval (broker will walk you through the steps) for an FHA mortgage (broker will walk you through all the documents they need you to sign)

i. An FHA mortgage is a tool that first time home buyers who will be owner-occupants (move into the property) can utilize

ii. Broker will run your credit (FHA minimum score threshold is around 550 I think, so hopefully you are a responsible, bill-paying-son-of-a-b*tch)!
​

3. Once you are pre-approved, the mortgage broker will get you the loan you need once your real estate broker (step 2) finds you the property you want. They will charge you a fee at closing (likely 1%, or 1 “point”) which can be rolled into your loan​

2. Engage a real estate broker​

1. 1. Same thing, head to Yelp! and pick based on reviews. Call a few and tell them what you are searching for:
      
   2. Tell your broker you want to look for owner-occupant Freddie Mac (HomeSteps), Fannie Mae (HomePath) properties that are between 2 to 4 units (our ideal number is 3 or 4 units)

i. The reason we like Fannie and Freddie foreclosures is because owner-occupant buyers have a 14 day window to bid on these properties before investors. This restriction is intended to keep real estate investors from driving up the price of houses on the home buying citizens of America. Which is good for you, Mr. first time home-buyer!​

3. Look at some properties (criteria)​

1. 1. Check out properties you think fit the size criteria, and that are in a good area of your city. Try to stick near big transportation hubs (trains) and try to pick an up-and-coming neighborhood (read: follow the hipsters)

i. Hipster neighborhoods are the next places that will “turn” economically in a given city, and are great spots to realize cash flow​

2. Hop on PadMapper.com (good for checking rents in an area) to see what kind of rents you can expect from the property you are looking at

i. Example (all made up): 3 unit, Seattle with all units having 2 beds 1 bath.

• Rents in the area are $1,000 per unit on average (same size, quality, finishes, etc.)

3. Take the gross amount of rents and apply a safe buffer of 50% for expenses:

i. 3 units x $1,000 = $3,000 per month gross rents x 50% = $1,500 expenses

• This means you keep $1,500 in your pocket (your “NOI” or Net Operating Income)

4. Figure out a buffer for your mortgage (and any possible cash flow)

i. If you paid $200,000 for this property @ 4.25% for 30-years and 3.5% down, your monthly payment would be ~$1,500. Voila, no mortgage

• This doesn’t take into account that most months you will not hit 50% expenses. Some will be 0% (very cash positive), some will be 150% (cash drain) so be sure to keep reserves set aside from the good months for when the bad months come around

ii. You make your money when you BUY not when you sell​

4. Pull the trigger!​

1. 1. I would recommend looking at 15 to 20 properties with your agent and getting a good feel for the market. You will start to recognize trends.

This whole process will only take 2 months or so and sets you up for months of lower-stress productivity. Stop subscribing to get rich quick mindset. Good things require process and take time.

If this interests you, just start calling people! Just because you talk to brokers doesn’t mean you HAVE to buy something. Good brokers will hold your hand through the whole process. If a property was recently rehabbed or isn't more than 10 years old...then use 40% for expenses when you do your quick-check math. If a property has under market rents...don't pay for what the property "COULD" be operating at. Pay what it is currently worth knowing that when you increase the rents you will cover your mortgage and realize equity appreciation. Just use common sense.

If you think you can spend your resources in a better place, or make the “jobless” leap without buying your “castle”, then please do. This thread is for people stuck in a job or who are too timid to take a leap of faith without first building a small form of support.

I did not even touch on the fact that you can utilize an FHA 203-k loan, and get rehab construction rolled up into your loan amount, or the larger fundamentals of apartment investing, but that is because I am not trying to teach you how to be a guru here, I am simply providing a path to ease your monthly financial burden.

If you are going to make this move and want to hit a home run, DO YOUR RESEARCH and take a dive down the rabbit hole. If you don’t want to spend a ton of time learning how to hit a home run, that’s alright because you must remember that singles, doubles and triples (pun intended) still put points on the board in the long-run. Just get moving NOW!

Read some apartment investing books over the course of a few weeks and then plan your path to freedom carefully. Don’t shoot in the dark, but make sure you do in fact shoot. No deal will ever be perfect. The timing will never be right. Pull the trigger now.

Note: I am not a financial advisor or a lawyer and this thread is purely an opinion that I hope you can draw from. Purchase property, or invest, at your own risk.

PS. Buy in the winter months if you want to get lower pricing and less market competition.

G

@G Alexander you are one smart young dude.

We had a BBQ over the 4th of July about 30 kids (my sons age early & mid 20's). Just for S&G I went around to each one (smart college educated types) and asked about their house buying plans, only 2! Yes, only 2 out of over 30 planned to buy homes. They spewed out various ridiculous, anecdotal stories and crazy theories about how things are different, you can't make money in real estate, unclogging toilets...blah blah blah

All drove newer cars, all had the IPhone XX whatever the newest phone is, all had significant jobs, disposable income, rent payments around 2k.

I said to them, given this trend do you know what is going to happened to your rent over the next 3-5-10 years? Or that a $2,000 a month rent payment is roughly equivalent (depending on your effective ) to about $2,800.00 per month, or a $500,000 home. They looked at me like I just escaped the old folks home.

I told them I bought my first home with a 30 year of over 9% and made every blunder, bought at all the worst times, made all the wrong decisions and yet 95% of my net worth is still real estate.

But not to just pick on young people, a few years back I bought a shit box in Huntington Beach CA and got the same story from friends and family my age. What are you doing, you already have real estate, it's noisy here, there is no parking, the economy is unstable, we could have a double dip recession.

And, after getting in this home finding out it needed way more improvement than I thought, they all gave me the I told you so look and said "What are you gonna do now?"

My answer, "buy more."

We don't even live in that house anymore...moved out couldn't afford the rent $2,800.00-we have two dumb a$$ millennials (financially dumb but great kids) renting it.

 

[IrishSpring600]

I don't get how this works, anyone mind cliffing the math for me? How can you pay $3,000 for 3 units, spend $1,500 on expenses, and then $1,500 on mortgage?

 

[biophase]

I don't get how this works, anyone mind cliffing the math for me? How can you pay $3,000 for 3 units, spend $1,500 on expenses, and then $1,500 on mortgage?

I think he meant that his tenants pay him $3000 at $1000/unit, and he uses $1500 on expenses and $1500 on its mortgage.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[IrishSpring600]

I think he meant that his tenants pay him $3000 at $1000/unit, and he uses $1500 on expenses and $1500 on its mortgage.

How does someone *not* get rich off real estate? Pardon my naiveness but isn't selling three units just a matter of talking to at least 100 potential clients?

 

[biophase]

How does someone *not* get rich off real estate? Pardon my naiveness but isn't selling three units just a matter of talking to at least 100 potential clients?

Based on your questions, I think that you are very confused here. You should probably go read some articles about how buying and sell real estate works. I don't want to derail the thread here with general real estate stuff. It will help you understand this entire thread a whole lot better.

 

[Jameshoo]

Have anyone tried this in NYC? I would love to hear how it went from you.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MKHB]

Have anyone tried this in NYC? I would love to hear how it went from you.

Probably a little harder.


http://www.globest.com/news/12_1174...rtgage-Affordability-Gap-Widens-360766-1.html

 

[Jameshoo]

Why are all FHA approved homes in not so great neighborhoods? :|

 

[Chitown]

Its not fastlane, but that doesnt matter because, in my mind, fastlane is also all about stacking the deck in your favor. Paying cheap or zero rent would definately qualify here.

@biggeemac

I couldn't agree with you more! "...Stacking the deck...", while keeping your eyes on the prize.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Duane]

My friend lives practically for free and I decided to share it here for everyone. I don't know if it's the same loan type, so bear with me. This isn't going to be super comfortable living as the house isn't super nice, but it isn't in a bad neighborhood or anything. I'd say C class.

He bought a duplex (6 bd/4ba) with his dad co-signing(think that's the term) so he would get approved. He rents out one side for 800 bucks a month (think the mortgage is like 900), then rents out 2 of the rooms in his house for 400 each. $1,600 a month, his expenses, including the utilities on his side, is around 1500ish. So he puts 100 bucks or w/e aside every month to use in-case there is a problem in the houses to be fixed(not talking big things, just the little stuff that adds up). All he has now is gas, phone bill and food to pay for!

The downside is roommates come and go frequently so it's hard to maintain stable people that you can trust in your house. (He is single of course with no wife/kids right now so it isn't a huge deal having roommates). I figure by the time he settles down his portfolio will be big enough to pay for his own house without requiring roommates.

This is something I want to do while I'm first starting out before I have any attachments/children, I'm sure he has had many struggles along the way. It isn't a get rich quick scheme, but it's effective at having passivity pay your bills.

 

[MKHB]

My friend lives practically for free and I decided to share it here for everyone. I don't know if it's the same loan type, so bear with me. This isn't going to be super comfortable living as the house isn't super nice, but it isn't in a bad neighborhood or anything. I'd say C class.

He bought a duplex (6 bd/4ba) with his dad co-signing(think that's the term) so he would get approved. He rents out one side for 800 bucks a month (think the mortgage is like 900), then rents out 2 of the rooms in his house for 400 each. $1,600 a month, his expenses, including the utilities on his side, is around 1500ish. So he puts 100 bucks or w/e aside every month to use in-case there is a problem in the houses to be fixed(not talking big things, just the little stuff that adds up). All he has now is gas, phone bill and food to pay for!

The downside is roommates come and go frequently so it's hard to maintain stable people that you can trust in your house. (He is single of course with no wife/kids right now so it isn't a huge deal having roommates). I figure by the time he settles down his portfolio will be big enough to pay for his own house without requiring roommates.

This is something I want to do while I'm first starting out before I have any attachments/children, I'm sure he has had many struggles along the way. It isn't a get rich quick scheme, but it's effective at having passivity pay your bills.

Here is another tip I learned, if you're in a city buy a house with an alley.

 

[S&P]

Found a condo that's 330k. Condo fees 227 monthly (including internet)

I don't have a job but own 2 corporations.

How much do I need to the bring to the closing table (In canada) to make this thread a reality for me guys?!

My companies are online Ecommerce straight sell websites. Is there anything I should know about condo ownership being classified as a head office? Any tax advantages?

I would really like to hustle hard and get into this place by May 2016 so I could stop paying rent and live free!

*Option for tenants* parents are selling their house and downsizing to get out of debt.. Their cummmulative incomes are around 4.5k after tax (pensions, passive icome)

They would make perfect tenants.


What do you guys suggest in terms of strategy to make this happen? Thanks, as always.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[exclusives88]

I found a triplex in Tampa in a neighborhood that has $500k - 1M homes. The 3 units are 3/1, 2/1, 1/1 and are occupied at rents being $1,050 , $1,050 , $650 respectively. The home is around $350k so it might be a winner. Normally, I'd like to purchase rentals that are 1 - 2% of the price of the home which means that I would have to offer 275k.

 

[MKHB]

Fastlane brothers and sisters, I am here to show you the light should you so accept to see it. I’d like to offer some advice from my experiences and to share the wealth of living rent free.

This is not a revolutionary topic, and I am not a revolutionary human. Living rent free has been done by many. Living rent free with cash flow has also been done by many (including me). It is easy. It will likely end up costing you less than $10,000 (I only brought $5,900 to the closing table on my first property). It’s a no brainer move for those of you who are hungry and ready to forge your own path in life. Ever since I posted about my first 3-flat, members have reached out to me asking what type of financing I utilized, where I began, what books I read...this thread is a basic answer to many of those questions.

This thread is not intended to make you join the apartment investor Fastlane (although cash flow has severely addictive qualities, just ask @SteveO, @AroundTheWorld, @zen*******, @RealOG, @CashFlowDepot, etc.). No, this thread is here to help you make one simple move that can stabilize your life as your pursue whatever Fastlane you choose. Stop paying the man each month (me) and start focusing on your goals. I hope that this thread will help even JUST ONE person on here to live without the constant cloud of having a rent / mortgage payment every month.

No longer will the excuse of “I have too many bills to pay to quit my job and enter the Fastlane full time” remain valid. We are building your shelter. We are building your money tree. We are building the castle from which you will wage your war.

This thread is targeted for those of you who currently have:

• A stream of income from your lame J.O.B., from your own business (need 2 years of 1099 history for this to work if self-employed), from your full blown Fastlane venture or from your sugar daddy/ momma (whatever) and
• Currently do not have an FHA mortgage

We are going to learn how to purchase a duplex, 3-flat or 4-flat with as little as 3.5% down that will cash-flow and pay for itself.

Are you tired of paying your landlord your hard earned wage each month and having nothing to show for it? Do you wish you had a money tree in your backyard? Good. Let’s rock and roll.

Let’s break down what you will need to do into a simple list:

1. Contact / engage a mortgage broker​

1. 1. Hop on Yelp! and search for the best mortgage broker in your city. Pick one who has high remarks in their reviews. Don’t get bogged down searching for the perfect mortgage broker. There are thousands in every city. Call a few and pick the one that pays attention to you (answers quickly, calls you back quickly, etc.)
   2. Obtain a mortgage pre-approval (broker will walk you through the steps) for an FHA mortgage (broker will walk you through all the documents they need you to sign)

i. An FHA mortgage is a tool that first time home buyers who will be owner-occupants (move into the property) can utilize

ii. Broker will run your credit (FHA minimum score threshold is around 550 I think, so hopefully you are a responsible, bill-paying-son-of-a-b*tch)!
​

3. Once you are pre-approved, the mortgage broker will get you the loan you need once your real estate broker (step 2) finds you the property you want. They will charge you a fee at closing (likely 1%, or 1 “point”) which can be rolled into your loan​

2. Engage a real estate broker​

1. 1. Same thing, head to Yelp! and pick based on reviews. Call a few and tell them what you are searching for:
      
   2. Tell your broker you want to look for owner-occupant Freddie Mac (HomeSteps), Fannie Mae (HomePath) properties that are between 2 to 4 units (our ideal number is 3 or 4 units)

i. The reason we like Fannie and Freddie foreclosures is because owner-occupant buyers have a 14 day window to bid on these properties before investors. This restriction is intended to keep real estate investors from driving up the price of houses on the home buying citizens of America. Which is good for you, Mr. first time home-buyer!​

3. Look at some properties (criteria)​

1. 1. Check out properties you think fit the size criteria, and that are in a good area of your city. Try to stick near big transportation hubs (trains) and try to pick an up-and-coming neighborhood (read: follow the hipsters)

i. Hipster neighborhoods are the next places that will “turn” economically in a given city, and are great spots to realize cash flow​

2. Hop on PadMapper.com (good for checking rents in an area) to see what kind of rents you can expect from the property you are looking at

i. Example (all made up): 3 unit, Seattle with all units having 2 beds 1 bath.

• Rents in the area are $1,000 per unit on average (same size, quality, finishes, etc.)

3. Take the gross amount of rents and apply a safe buffer of 50% for expenses:

i. 3 units x $1,000 = $3,000 per month gross rents x 50% = $1,500 expenses

• This means you keep $1,500 in your pocket (your “NOI” or Net Operating Income)

4. Figure out a buffer for your mortgage (and any possible cash flow)

i. If you paid $200,000 for this property @ 4.25% for 30-years and 3.5% down, your monthly payment would be ~$1,500. Voila, no mortgage

• This doesn’t take into account that most months you will not hit 50% expenses. Some will be 0% (very cash positive), some will be 150% (cash drain) so be sure to keep reserves set aside from the good months for when the bad months come around

ii. You make your money when you BUY not when you sell​

4. Pull the trigger!​

1. 1. I would recommend looking at 15 to 20 properties with your agent and getting a good feel for the market. You will start to recognize trends.

This whole process will only take 2 months or so and sets you up for months of lower-stress productivity. Stop subscribing to get rich quick mindset. Good things require process and take time.

If this interests you, just start calling people! Just because you talk to brokers doesn’t mean you HAVE to buy something. Good brokers will hold your hand through the whole process. If a property was recently rehabbed or isn't more than 10 years old...then use 40% for expenses when you do your quick-check math. If a property has under market rents...don't pay for what the property "COULD" be operating at. Pay what it is currently worth knowing that when you increase the rents you will cover your mortgage and realize equity appreciation. Just use common sense.

If you think you can spend your resources in a better place, or make the “jobless” leap without buying your “castle”, then please do. This thread is for people stuck in a job or who are too timid to take a leap of faith without first building a small form of support.

I did not even touch on the fact that you can utilize an FHA 203-k loan, and get rehab construction rolled up into your loan amount, or the larger fundamentals of apartment investing, but that is because I am not trying to teach you how to be a guru here, I am simply providing a path to ease your monthly financial burden.

If you are going to make this move and want to hit a home run, DO YOUR RESEARCH and take a dive down the rabbit hole. If you don’t want to spend a ton of time learning how to hit a home run, that’s alright because you must remember that singles, doubles and triples (pun intended) still put points on the board in the long-run. Just get moving NOW!

Read some apartment investing books over the course of a few weeks and then plan your path to freedom carefully. Don’t shoot in the dark, but make sure you do in fact shoot. No deal will ever be perfect. The timing will never be right. Pull the trigger now.

Note: I am not a financial advisor or a lawyer and this thread is purely an opinion that I hope you can draw from. Purchase property, or invest, at your own risk.

PS. Buy in the winter months if you want to get lower pricing and less market competition.

G

Hey Brother

I thought about you when I saw this the other day. http://www.bloomberg.com/news/artic...-4-2-billion-for-seventh-u-s-real-estate-fund

You probably know this guy (Belisky), he is one of the bigger IB players in my area DC and as I am sure as you already know, they are all in on mobile/manufactured housing plays.

You really called this one....(mobile/manufacturing gold).

Looks like the mobile/manu space has a lot more runway now that these guys (Belisky/Carlyse) have an an extra 4B to play with.

PM me or hit me up on the LinkedIn, got some interesting stuff along these lines that I'm working on, let's put our heads together on this one.

MK

 

[S&P]

Found a condo that's 330k. Condo fees 227 monthly (including internet)

I don't have a job but own 2 corporations.

How much do I need to the bring to the closing table (In canada) to make this thread a reality for me guys?!

My companies are online Ecommerce straight sell websites. Is there anything I should know about condo ownership being classified as a head office? Any tax advantages?

I would really like to hustle hard and get into this place by May 2016 so I could stop paying rent and live free!

*Option for tenants* parents are selling their house and downsizing to get out of debt.. Their cummmulative incomes are around 4.5k after tax (pensions, passive icome)

They would make perfect tenants.


What do you guys suggest in terms of strategy to make this happen? Thanks, as always.

Anyone?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Michael Burgess]

Anyone?

My understanding is that you need to put minimum 5% down on a mortgage for your first house in Canada. Your lender will likely do a 95% LTV (loan to value) at a higher interest rate than if you did more, and you may require a second mortgage (eg. 83% 1st mortgage @ 5% interest, 12% 2nd mortgage @ 12% interest, 5% down payment). Also, any mortgage with less than 20% down will require CMHC insurance, to protect lenders from default.

On another note, my Dad had ~30 commercial properties in the 1980s and had big cash coming in. He was heavily leveraged, and interest rates shot up to something like 25% at the same time that his tenants couldn't pay their rents. He ended up in bankruptcy after trying to sell properties to cover the cashflow shortage. I know other people have been talking about being careful with leverage, but it's probably important to read through your mortgage agreement carefully too... you don't want to get caught with a mortgage rate that goes up if you're not expecting it!

 

[Trevor Chaumont]

I'm going to study this post/thread and look for ways to get started on my own. Thanks for this!

 

[MattCour]

Anyone?

A condo defeats the purpose of what G Alexander has done here. House hacking is buying a multi unit property and living in one while the other units rental income pays for your unit essentially.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Greg R]

I completely agree! I wrote a very similar about paying yourself and not the landlord. I wish more people were into personal finance. I feel as though the topic is taboo or something. Every time I bring it up the conversation goes silent. I learned now not to give advice unless asked.

 

[TrowelHead]

Has anyone got any experience of doing this in the UK?

I have found some suitable buildings in my area that were once large victorian residences, now converted into 4/5 units.

The numbers stack up.

For one example i am looking at:

5 unit block:
Purchase Price - £300,000
Deposit (down payment) Required @25% = £75,000
Mortgage Payment - 5% of £225,000 = £11,250pa or £937.50pcm
4 units rented out = £1850pcm
Cashflow (gross) = £912 pcm
Plus saving me the housing costs i currently pay...
(above figures don't include upkeep, communal area energy costs etc)

My mortgage broker says i will need commercial finance for the deal. (personal residential mortgage is not available if renting out other units here in UK)

I would love to hear from anyone who has made this work in the UK.

(Another option is to purchase a regular home and rent out a room or two to cover the mortgage... my partner is less keen on this idea