STOP Paying Rent: Live For Free

[DeletedUser394]

So much fail intermingled with so much awesomeness all packaged within one little thread for easy readings.

Did he freaking edit his post AGAIN?

What you quoted and what is currently written are 50% different... What the hell man...

 

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[PeeVee]

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

Thanks for posting this great post my brother ... this is the type of stuff thats so great about this forum. Just enough info on the process to get others going in the right direction.

Quick question - after the Pre-Approval you jumped right into finding a 2-4 units building as an Owner Occupant. Is that correct or is there a missing step? Can you use FHA to buy a multi-unit property and occupy one of the units to qualify as an owner occupant?

 

[Red]

Can you use FHA to buy a multi-unit property and occupy one of the units to qualify as an owner occupant?

You can purchase up to a four-unit multi-plex with FHA financing, as long as you're occupying one of the units. Each county has different limits on FHA loans so you'll want to check their limits for your specific area so you know how much you can potentially spend.

 

[PeeVee]

You can purchase up to a four-unit multi-plex with FHA financing, as long as you're occupying one of the units. Each county has different limits on FHA loans so you'll want to check their limits for your specific area so you know how much you can potentially spend.

Thanks for the answer @Red

 

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[G_Alexander]

Thanks for posting this great post my brother ... this is the type of stuff thats so great about this forum. Just enough info on the process to get others going in the right direction.
Quick question - after the Pre-Approval you jumped right into finding a 2-4 units building as an Owner Occupant. Is that correct or is there a missing step? Can you use FHA to buy a multi-unit property and occupy one of the units to qualify as an owner occupant?

Thanks for the kind words PeeVee. Hope the thread aides you in your search!

Yes, after pre-approval I jumped right into looking for properties. I would try a few different brokers, but try to pick a couple younger ones (along with older ones) who are HUNGRY (first few years of their career) and sit down with them to make sure you feel that they are smart. They need to have brains and hustle muscles. Don't go with a total noob, but someone who has some sales under their belt and wants more.

And as @Red said already (thank you sir), yes, up to 4 units. And on dollar amount in Chicago, for example, approx. $740,000 if the building is a 4-unit.

 

[Red]

ollar amount in Chicago, for example, approx. $740,000 if the building is a 4-unit.

goddamn. I wish we had your limits over here in Phoenix!

 

[mgore714]

What neighborhoods of Chicago you investing in?

Also, how do you account for depreciation?

 

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[G_Alexander]

What neighborhoods of Chicago you investing in?

That's the secret sauce, boss

Also, how do you account for depreciation?

You get to depreciate the value of the building (non-inclusive of the land) over a 27.5 year period. Ask your tax guy (even if that means H&R block or whatever) how to treat the fact that you live in 1/3 or 1/4 of the building. You can't depreciate your own living space.

Disclaimer: I am not a tax pro.

 

[mgore714]

That's the secret sauce, boss

Not really "secret". I have a broad network of real estate investors and they're all pouring money into Logan Square, West Town, Wicker Park, Humboldt Park, and Pilsen. Guess their "secret" is out...I was just curious to see where you were buying.

You get to depreciate the value of the building (non-inclusive of the land) over a 27.5 year period. Ask your tax guy (even if that means H&R block or whatever) how to treat the fact that you live in 1/3 or 1/4 of the building. You can't depreciate your own living space.

Disclaimer: I am not a tax pro.

Also I wasn't referring to tax deductions. I was referring to how do you account for depreciation on the property itself? Let's say you're currently getting $3,000 in rental income. How do you calculate what you're expected to get in 10 years? Note: if this is not something that you account for then eventually you will get screwed, as will all the people that follow your advice here.

 

[Steve37]

Also I wasn't referring to tax deductions. I was referring to how do you account for depreciation on the property itself? Let's say you're currently getting $3,000 in rental income. How do you calculate what you're expected to get in 10 years? Note: if this is not something that you account for then eventually you will get screwed, as will all the people that follow your advice here.

He covered this in his first post with assuming expenses at 50% of gross rents. Barring anything ridiculous that should be more than enough to handle larger repairs or capex.

 

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[G_Alexander]

Not really "secret". I have a broad network of real estate investors and they're all pouring money into Logan Square, West Town, Wicker Park, Humboldt Park, and Pilsen. Guess their "secret" is out...I was just curious to see where you were buying.

You'r network is 5 years late to those parties. Those areas have already turned, except Pilsen. You didn't name one place where I would be putting my money.

Also I wasn't referring to tax deductions.

You didn't specify when you asked. I'm not delving into depreciation re-caps or more complex topics here either. As @Steve37 said, the 50% buffer includes cash reserves you should be setting aside. We don't want to scare people away, but having $5,000 in a side account after some stable months of operating is not difficult. Or rocket science.

I think most people here, especially the ones who would try this, aren't as naive as you think.

 

[SteveO]

What @G_Alexander has done here is started the process. He has a passion for real estate and plans big things. Most people don't just jump into large apartment deals from the start. There is a lot of knowledge and experience that comes from starting small.

A quick story about this kid (you can straighten me out if I misrepresent any details).

A number of years ago, this 18 year old kid gets in contact with me. He asks some questions and shares some stories about a big apartment investor in Chicago that he had recently met up with.

At one point he tells me that he is coming to Phoenix and would like to meet up. Well, RealOG, some of my family members and I happened to be having a get together at my house and invited him along. We had a very small party with pizza and ultimate fighting on ppv. He was 18 or so and had his dad drop him off and pick him up.

This is not something that you see from the typical kid that wants to go out and party or hang with friends. Instead, he was making efforts to talk to all the real estate doers that he could find.

Oh yeah, @biophase was there also. How could I leave him out of the story? Duh...

 

[AroundTheWorld]

I find it interesting that people are being so hard on the OP in this thread.

Yes, one must look at all angles when considering a deal.
Yes, one must plan for major repairs.
Yes, one must research the local market.

But... let me ask you... has Likwid24 disclosed every single thing he has learned on his journey?
Did bensonj disclose all of her knowledge and lessons on her gold thread?
Do you think Zen and Vig and all the other people here have shared all that they know?
MJ has written an entire book and do you think all of his knowledge is there?

OF COURSE NOT.
We will all learn from OUR OWN JOURNEYS. Listening to the experience of other's will only get you so far.
EACH and EVERY one of us is responsible for our own knowledge and our own thought processes.
To take the information contained in any one thread on these forums and consider it the end all, be all is absurd.

Why are people treating this thread as if it needs to be the end all be all of real estate before it is something that is of value? Maybe because it is real estate and real estate is scary? Interesting.

 

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[ddzc]

It's a little too common (not only on this forum) where you see someone with a wealth of knowledge come out, share it and get bashed for it. Or someone lays out a process including a cash flowing positive amazon business and someone rips it off completely. It's unfortunate, but I'm glad to see a thread like this here...Steve's is awesome too.

I've looked in to this a bit myself. I actually found an awesome triplex which was cash flowing 1500/mth and was excited about it, until I walked in to the place..total chaos, I was surprised the place was still standing from structural damage and also surprised it hadn't caught fire from the floods and water leaks pouring on the electrical system...something I never expected or prepared for.

In Toronto, it's tough to find any tris/4plexes which will cash flow a dime, without a 50% down payment as per my calculations. It may be possible, yes...but does take work and time, just like any business.

Thanks for the the thread and knowledge @G_Alexander

 

[Red]

Yes, I'm being hard on the OP.

When I see something like this posted, especially the part where he's "here to show you the light should you so accept to see it" it smacks of MLM/self-appointed-guru events (you know the ones, they advertise them on the radio & you enter an even where there's music to amp you up & a guy dressed like a preacher comes out & whips everyone into an emotional frenzy) where they teach you to "use other people's money to get wealthy!" & how you can be the "new rich"... I'm not saying the OP is this guy, I'm saying this is how it comes across to me.

The problem that I have with this type of thinking is it's all about getting the money. Do this, this & this & you can have ALL THIS! And while that may be true, they conveniently leave out the responsibility side of things. The laws you need to study to understand your obligations & legal duties as a landlord (even if someone else is managing it) are never mentioned. I'm not asking for every little detail on maintaining proper insurance or making sure your property is properly registered with the county assessors office -you guys are right, that is part of the responsibility of the actual "do-er" to make sure they're complaint with local laws & such. I'm just asking for balance in the presentation because, just like many things in life, just because you CAN do something like this, doesn't necessarily mean you should.

The reason I'm hard on these types of posts is because I have dealt with the not-so-glamorous aftermath of these types of "investor" guys for the past 5-6 years after our Phoenix real estate market went in the shitter. I get calls from people (usually friends of mine, I wasn't their broker) who's AC goes out in August & they can't find the landlord (his number is disconnected) & they have NO MEANS of getting repairs done. I look up the home & it's actually in foreclosure. What chance do you think they have of getting their AC fixed let alone their deposits back so that they can find a new home? Exactly. Or the landlord who brings out a guy to repair a water heater & the guy (who is no licensed, bonded or insured, btw) burns the house down from sweating pipe. The landlord didn't have proper insurance on the home & the tenants lost everything (yes, they had some responsibility here as well to maintain insurance). I know I'm layout out worst case scenarios here & they're rare, but they happen. And they affect peoples lives, sometimes in a very profound way.

I would just like to see balance in a post like this, that's all I'm saying. YES, tell people how they can make money & live for free, YES, explain the success you've had and help open minds to it & YES, I love seeing success stories. But I would like to see a balance. I would like to see the "You can make a ton of money this way & live for free" & ALSO make sure your tenants are taken care of properly. Aren't we all about providing value? And a good experience for our customers? Maybe some tips of finding quality property management (if you don't want to do it yourself) & the like. That's all I'm saying. It's great to see the roses, but people need to be made aware of the thorns so they can avoid them & everyone has a good experience.

 

[SteveO]

If you don't provide value to the resident, you will not have them or their payment for long.

 

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[biggeemac]

Yes, I'm being hard on the OP.

When I see something like this posted, especially the part where he's "here to show you the light should you so accept to see it" it smacks of MLM/self-appointed-guru events (you know the ones, they advertise them on the radio & you enter an even where there's music to amp you up & a guy dressed like a preacher comes out & whips everyone into an emotional frenzy) where they teach you to "use other people's money to get wealthy!" & how you can be the "new rich"... I'm not saying the OP is this guy, I'm saying this is how it comes across to me.

The problem that I have with this type of thinking is it's all about getting the money. Do this, this & this & you can have ALL THIS! And while that may be true, they conveniently leave out the responsibility side of things. The laws you need to study to understand your obligations & legal duties as a landlord (even if someone else is managing it) are never mentioned. I'm not asking for every little detail on maintaining proper insurance or making sure your property is properly registered with the county assessors office -you guys are right, that is part of the responsibility of the actual "do-er" to make sure they're complaint with local laws & such. I'm just asking for balance in the presentation because, just like many things in life, just because you CAN do something like this, doesn't necessarily mean you should.

The reason I'm hard on these types of posts is because I have dealt with the not-so-glamorous aftermath of these types of "investor" guys for the past 5-6 years after our Phoenix real estate market went in the shitter. I get calls from people (usually friends of mine, I wasn't their broker) who's AC goes out in August & they can't find the landlord (his number is disconnected) & they have NO MEANS of getting repairs done. I look up the home & it's actually in foreclosure. What chance do you think they have of getting their AC fixed let alone their deposits back so that they can find a new home? Exactly. Or the landlord who brings out a guy to repair a water heater & the guy (who is no licensed, bonded or insured, btw) burns the house down from sweating pipe. The landlord didn't have proper insurance on the home & the tenants lost everything (yes, they had some responsibility here as well to maintain insurance). I know I'm layout out worst case scenarios here & they're rare, but they happen. And they affect peoples lives, sometimes in a very profound way.

I would just like to see balance in a post like this, that's all I'm saying. YES, tell people how they can make money & live for free, YES, explain the success you've had and help open minds to it & YES, I love seeing success stories. But I would like to see a balance. I would like to see the "You can make a ton of money this way & live for free" & ALSO make sure your tenants are taken care of properly. Aren't we all about providing value? And a good experience for our customers? Maybe some tips of finding quality property management (if you don't want to do it yourself) & the like. That's all I'm saying. It's great to see the roses, but people need to be made aware of the thorns so they can avoid them & everyone has a good experience.

Hmmm, I think the idiot newb that wanders into this playing field with no kind of guidance whatsoever, no research, and no business savvy, and a "get-rich" mentality deserves to have his a$$ handed to him. For those of us that had parents that succeeded during the RE bull run over the last few decades and are looking for a way in without being left holding the bag, I think its a great idea worth looking into. I, for one, knew that this method would be possible, with plenty of hard work of course, but never saw anyone break it down this way that makes things a little more simple to understand. I appreciate the post and have taken it for everything thing thats contained, with no pie in the sky expectations.

PS.....my dad and grandpa both own many properties and would be able to coach me through some of the pitfalls and struggles in the area that I live.

 

[G_Alexander]

Yes, I'm being hard on the OP.

I would just like to see balance in a post like this, that's all I'm saying. YES, tell people how they can make money & live for free, YES, explain the success you've had and help open minds to it & YES, I love seeing success stories. But I would like to see a balance.

So you would rather start seeing members post things like....

"Starting a B2B distribution company in a stable and tired niche can be lucrative....but you might not want to start a distribution company, because you might have to make hundreds of phone calls, you might lose a major contract or all your supplier contracts, you might get sued if someone gets hurt using your product, you will have to go through tons of paperwork and incorporation and tax issues to protect yourself and THEN you still have to maintain and the books and finances and manage your cash flows. And none of it might work out at all! You could lose everything!"

....doesn't sound so good, does it? Sounds like the classic, pessimistic mindset to me. Focusing in on all the negative "what if's?".

My other threads have balance. Real estate investment books have balance. Using brokers with high reviews will provide you with balance (they have already provided value to other people, so you can feel good knowing they will help you).

@SteveO said it best already. Putting a roof over someone's head and making necessary repairs / treating your tenants with respect is what keeps them around. Real estate is a business. You still need to provide value.

While I do see where you're coming from...This is the FASTLANE forum, not handouts central. If someone here is motivated, they can take these steps and be on their way. Clarity comes from action. @IceCreamKid said it in another thread:

Once upon a time I had a crush on this pretty girl. I had her number and for days I hesitated to call her. By golly, she was so pretty I just had to do it. But ahh what would she think? Would she be annoyed? Would she be too busy? Would she wonder why I'm calling?

I called her. She was so happy to hear from me. All of those previous thoughts of mine faded away in 10 seconds.

I'm not here to hold your hand each step you take. But if you PM me I will be more than happy to help you if you need further guidance (I'm already doing this for others).

Funny thing is...I'm not selling anything at the end of my posts. I am simply giving back to the people that help me daily.

 

[IceCreamKid]

Funny thing is...I'm not selling anything at the end of my posts. I am simply giving back to the people that help me daily.

Even though you're not selling anything, I would actually offer to pay you for your expertise and help because it would still end up FAR cheaper than spending years making mistakes on my own and trying to put the puzzle pieces together. It blows my mind how many people don't want to give up 10% of their company even though it could potentially cause them to make far more money in a shorter period of time.

Speeding up failure and execution by having someone further along the road to help you is huge. There simply isn't enough time to master everything by yourself. Nobody is Superman.

Epic thread btw...should be tagged gold IMO. I like real estate.

If real estate is considered unsexy then by golly I want to be the unsexiest man alive.

 

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[Guest14692]

I'm in the process of closing on a 4 unit and I'm ecstatic to post my journey to my first property ever once everything is finalized!

I found a mortgage broker who qualified me for a 10% down FHA loan. We are also investigating if there is any USDA funding available. It's a rural area, but doesn't hinder the ROI or vacancy risk by any means. I just wouldn't be able to force-appreciate aggressively.

The affidavit states I only have to live in the property for 1 year.

To G_Alexanders point, after the one year I will be able to acquire my second FHA single family property (From multi-unit to single family)

Very exciting stuff. I'm hoping I can continue with another 1 year affidavit and then rent that suminab*tch out too.



-Joe

Word of advice: Bank typically have a first home program that looks promising. If you have any inkling towards becoming a landlord or turning a home into a non-owner occupied property, make sure you call around and investigate all options.

 

[Windsurfer]

This is a great thread. I sure wish I had started out this way. I would be living on an island now enjoying life. I own a bunch of duplexes and triplexes and wrote a book on how to do exactly what is in this thread. It is too big to upload here, but if you go to Amazon, you can buy it for $0.99. If you don't want to pay, feel free to PM me and I will send you the book for free (assuming you don't mind giving me your email). I can also send you my lease, ads I use, a spreadsheet to figure out if what you have is a good deal etc.

http://www.amazon.com/dp/B00E1GWKAC/?tag=tff-amazonparser-20

I am NOT trying to upsell anyone here either, so don't worry about that. I just REALLY believe in this idea. I wrote the book because my office co-workers saw me making some money at this and kept asking me questions. Thanks for starting it @G_Alexander !

 

[bruynjustin]

Thanks for sharing. This is a nice post. It is a better idea to get own house rather than paying rent.

 

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[ArthurDayne]

I really enjoyed this and I think it's realistically my next step in wealth building now that I've got a decent pile of capital sitting around. At a certain point I only want to much in equities.

OP: What's the max amount of a DP you'd be willing to put toward this? Do you see have any upside to having more starting equity?

Cheers

 

[G_Alexander]

OP: What's the max amount of a DP you'd be willing to put toward this? Do you see have any upside to having more starting equity?

No. This scenario is attractive because using the FHA loan allows for minimal (3.5%) down payment...which means you can keep more liquid capital in your pocket and use it to pursue your Fastlane business venture.

When it comes to deals in general, personally...I like to have as little equity as possible at acquisition. Create realizable value. Refinance into a healthy leverage level (75% LTV) and pull out excess cash equity return. You make your money when you buy, not when you sell. So buy cheap, use other people's money (banks, equity investors, etc.) and sell after value creation / debt pay-down (using tenants money to pay down debt each month).

 

[Lagron]

G_Alexander, I have to say I do love this thread. It wouldn't apply to me but it can work for friends and family and I'm surely going to share it, with the hope that they include me in some form of deal

 

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[mtnman]

I like this idea, with the exception of occupying a unit. Are there any loopholes to that? I did a bit of research, and it looks like Homepath will fine you $10k if you don't complete your years worth of residency. Several instances of people saying most rarely get caught, but that seems like abusing the system for so little down.

Would you take on something that needed major rehabbing for this? As an example, I searched my area, and most of these look like they need a shitload of work: https://www.homepath.com/listing?listingid=44321823

This is better, but not enough units to make it worthwhile I don't think: https://www.homepath.com/listing?listingid=41088961

 

[Determined2012]

Would you take on something that needed major rehabbing for this? As an example, I searched my area, and most of these look like they need a shitload of work: https://www.homepath.com/listing?listingid=44321823

That price seems decent for 4 units! In Chicago you can't get that.

Wells Fargo has a program where you can get the mortgage for the property, rehab costs to fix it up, and up to 6 months worth of the mortgage payment all wrapped in one loan, with only 3.5% down + a (minimum) of a 640 credit score. Might be worth looking further into. With this financing option the property has to be owner occupied.

 

[Deleted21704]

Incredible thread. @G_Alexander have you or anyone heard of Fannie Mae's "My Community Mortgage" program? This article says it only requires 3% down with some advantages regarding the monthly insurance premium:

http://www.washingtonpost.com/reale...6c7438-e7f0-11e2-aa9f-c03a72e2d342_story.html

 

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[SIcmart]

@G_Alexander Thank you for this awesome thread! It's been a really motivating read!

I just have one question, hope I didn't miss anything above, but how is it that when you use one of these FHA loans with a low down payment, PMI isn't required. I always thought they go hand-in-hand.

Thanks again!

 

[Guest14692]

I'm in the process of closing on a 4 unit and I'm ecstatic to post my journey to my first property ever once everything is finalized!

I found a mortgage broker who qualified me for a 10% down FHA loan. We are also investigating if there is any USDA funding available. It's a rural area, but doesn't hinder the ROI or vacancy risk by any means. I just wouldn't be able to force-appreciate aggressively.

The affidavit states I only have to live in the property for 1 year.

To G_Alexanders point, after the one year I will be able to acquire my second FHA single family property (From multi-unit to single family)

Very exciting stuff. I'm hoping I can continue with another 1 year affidavit and then rent that suminab*tch out too.



-Joe

Word of advice: Bank typically have a first home program that looks promising. If you have any inkling towards becoming a landlord or turning a home into a non-owner occupied property, make sure you call around and investigate all options.

I just created a quick thread on this property. Hope you enjoy!
https://www.thefastlaneforum.com/community/threads/first-apartment-building-acquisition-done.53773/