Starting out and wanting to get into first multifamily deal

Scottsdale, Arizona
Starting Out
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Starting out and wanting to get into first multifamily deal

Ethan Dezzani
Member since 2022 · 7 posts · 3 votes

Hey guys!

My name is Ethan Dezzani. I am 20 years old and going into junior year at ASU. My major is business communication and I have a minor in real estate. 

I have some money saved up and currently have it all invested in stocks. I want to transition out of the stock market and get into my first real estate deal. My goal is to buy a 3 or 4 unit multifamily that is in a good area with immediate value add potential. Then go ahead and possibly do some kind of househack it or just rent them out.

Being a full time student I am going to need to get creative with how I am going to fund this deal. I see my options as the following:

1. I was thinking I could partner with someone I trust and possibly qualify for some kind of FHA loan. The bank would be looking at my partner for whatever W2 and income verification that we would need to qualify for this loan. From my current knowledge my partner would have to live in one of the units. If I do happen to find a partner that would want this kind of agreement, I would be fine with it and just stay at my current residence. I am not even sure if this is possible. If this is possible however, I could potentially be able to control a very nice piece of property with what I have saved up.

2. Get very aggressive and put together some kind of seller financed deal. I have been thinking hard about this one and how I could make it happen. I would likely have to pay a pretty good premium to be able to have seller hold the note. I would be completely fine with this as long as I can make the numbers work. I immediately think of the phrase “I would be willing to give you want you want if you give me the terms that I want.” I am also trying to put a plan together on how I would be able to find a deal like this.


I am planning to make this deal a reality this fall or winter. I think that the market will soften a bit more and by that time I would be in a better position as a buyer. Especially if I am trying to do a seller financing deal.

I look forward to some great ideas and thank you in advance very much!! 

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Jeremy Hunter
Member since 2019 · 16 posts · 11 votes
4y

The purchase triangle... Cash, Credit, Income. Those that have all 3 get the best rates and loans. If you have 2 of the 3 that's where specialized loans and creativity come in.

You have some challenges as your cash is low, your income isn't there, and being only 20 probably not a lot of credit history. Not trying to discourage you and awesome you are getting into this so young! House hack is for sure the way to go, it's a matter of can you qualify for a 2-4 unit property and have your own apartment or do you need to rent rooms in a single family situation? Do you have a family member in financial and credit situation to buy with you as a partner? That is likely your best bet.

And a little advice, don't think about this first deal as something that is going to "make" you money. If you can put together a first deal at your age that you are house hacking and paying equal or less to own as you would to rent, paying down principal and starting to build equity even without appreciation, and get some depreciation to offset tax liability on income you do make..... at 20 years old, you are WAY ahead of 99% of people your age!!

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  • Nicholas Coulter
    Real Estate Agent · Southern California · Member since 2019 · 681 posts · 281 votes
    4y

    @Ethan Dezzani Would you consider a rent by the room? Typically they have a much higher ROI. 5% down payment and renting out rooms near the college could be a great way to get started.

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Ethan Dezzani:

    Hey guys!

    My name is Ethan Dezzani. I am 20 years old and going into junior year at ASU. My major is business communication and I have a minor in real estate. 

    I have some money saved up and currently have it all invested in stocks. I want to transition out of the stock market and get into my first real estate deal. My goal is to buy a 3 or 4 unit multifamily that is in a good area with immediate value add potential. Then go ahead and possibly do some kind of househack it or just rent them out.

    Being a full time student I am going to need to get creative with how I am going to fund this deal. I see my options as the following:

    1. I was thinking I could partner with someone I trust and possibly qualify for some kind of FHA loan. The bank would be looking at my partner for whatever W2 and income verification that we would need to qualify for this loan. From my current knowledge my partner would have to live in one of the units. If I do happen to find a partner that would want this kind of agreement, I would be fine with it and just stay at my current residence. I am not even sure if this is possible. If this is possible however, I could potentially be able to control a very nice piece of property with what I have saved up.

    2. Get very aggressive and put together some kind of seller financed deal. I have been thinking hard about this one and how I could make it happen. I would likely have to pay a pretty good premium to be able to have seller hold the note. I would be completely fine with this as long as I can make the numbers work. I immediately think of the phrase “I would be willing to give you want you want if you give me the terms that I want.” I am also trying to put a plan together on how I would be able to find a deal like this.


    I am planning to make this deal a reality this fall or winter. I think that the market will soften a bit more and by that time I would be in a better position as a buyer. Especially if I am trying to do a seller financing deal.

    I look forward to some great ideas and thank you in advance very much!! 

    You could look at buying a property right now to house hack. It requires less than 5% down, which you should be able to borrow from a family member or friend. Live in one room, rent the others out, and the cash flow should enable you to pay back the down payment quickly. You'll live there for two years and build experience as a Landlord and enable you to step out and house hack something else after graduation, maybe a fourplex.

    The DIY Landlord Book4.7248 Reviews
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    0Reply
  • Ethan Dezzani
    OP
    Member since 2022 · 7 posts · 3 votes
    4y
    Quote from @Nicholas Coulter:

    @Ethan Dezzani Would you consider a rent by the room? Typically they have a much higher ROI. 5% down payment and renting out rooms near the college could be a great way to get started.


    This is a great idea thank you. What type of loan would I be looking at to be able to put 5% down? Right now I do not have any income coming in. Would it be some kind of DSCR loan?

    0Reply
  • Ethan Dezzani
    OP
    Member since 2022 · 7 posts · 3 votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Ethan Dezzani:

    Hey guys!

    My name is Ethan Dezzani. I am 20 years old and going into junior year at ASU. My major is business communication and I have a minor in real estate. 

    I have some money saved up and currently have it all invested in stocks. I want to transition out of the stock market and get into my first real estate deal. My goal is to buy a 3 or 4 unit multifamily that is in a good area with immediate value add potential. Then go ahead and possibly do some kind of househack it or just rent them out.

    Being a full time student I am going to need to get creative with how I am going to fund this deal. I see my options as the following:

    1. I was thinking I could partner with someone I trust and possibly qualify for some kind of FHA loan. The bank would be looking at my partner for whatever W2 and income verification that we would need to qualify for this loan. From my current knowledge my partner would have to live in one of the units. If I do happen to find a partner that would want this kind of agreement, I would be fine with it and just stay at my current residence. I am not even sure if this is possible. If this is possible however, I could potentially be able to control a very nice piece of property with what I have saved up.

    2. Get very aggressive and put together some kind of seller financed deal. I have been thinking hard about this one and how I could make it happen. I would likely have to pay a pretty good premium to be able to have seller hold the note. I would be completely fine with this as long as I can make the numbers work. I immediately think of the phrase “I would be willing to give you want you want if you give me the terms that I want.” I am also trying to put a plan together on how I would be able to find a deal like this.


    I am planning to make this deal a reality this fall or winter. I think that the market will soften a bit more and by that time I would be in a better position as a buyer. Especially if I am trying to do a seller financing deal.

    I look forward to some great ideas and thank you in advance very much!! 

    You could look at buying a property right now to house hack. It requires less than 5% down, which you should be able to borrow from a family member or friend. Live in one room, rent the others out, and the cash flow should enable you to pay back the down payment quickly. You'll live there for two years and build experience as a Landlord and enable you to step out and house hack something else after graduation, maybe a fourplex.


     Great thank you very much! What type of loan would I be looking at to be able to put 5% down? Being a full time student I do not have any solid W2 income coming in

    0Reply
  • Nicholas Coulter
    Real Estate Agent · Southern California · Member since 2019 · 681 posts · 281 votes
    4y

    @Ethan Dezzani I have only done 5% down conventional loans with my w2 income to qualify me. Any chance you could get a family member to co sign? You could run a deal analysis presentation to them and have them as an equity partner on the deal if you ever sell to give them incentive to co sign and you can run the property at break even numbers until you have enough income after graduating to buy another on your own.

    0Reply
  • Grant SchroederPro Member
    Lender · OR ID AZ CA WA CO NV TN MT · Member since 2018 · 598 posts · 312 votes
    4y

    @Ethan Dezzani you could put as little as 3% down on a conventional loan as a FTHB. If you have a non occupying coborrower to allow you to buy now, you would need to put 5% down on a 1 unit and rent out the rooms. You cannot have a non occupying coborrower on a 2-4 unit with an FHA loan and still be able to do 3.5% down unfortunately. Glad to hop on a call and walk through the details with you if you'd like!

    [email protected]541-231-1256
    0Reply
  • Ethan Dezzani
    OP
    Member since 2022 · 7 posts · 3 votes
    4y
    Quote from @Grant Schroeder:

    @Ethan Dezzani you could put as little as 3% down on a conventional loan as a FTHB. If you have a non occupying coborrower to allow you to buy now, you would need to put 5% down on a 1 unit and rent out the rooms. You cannot have a non occupying coborrower on a 2-4 unit with an FHA loan and still be able to do 3.5% down unfortunately. Glad to hop on a call and walk through the details with you if you'd like!


     Hi Grant, thank you so much that would be great!

    0Reply
  • Jeremy Hunter
    Member since 2019 · 16 posts · 11 votes
    4y

    The purchase triangle... Cash, Credit, Income. Those that have all 3 get the best rates and loans. If you have 2 of the 3 that's where specialized loans and creativity come in.

    You have some challenges as your cash is low, your income isn't there, and being only 20 probably not a lot of credit history. Not trying to discourage you and awesome you are getting into this so young! House hack is for sure the way to go, it's a matter of can you qualify for a 2-4 unit property and have your own apartment or do you need to rent rooms in a single family situation? Do you have a family member in financial and credit situation to buy with you as a partner? That is likely your best bet.

    And a little advice, don't think about this first deal as something that is going to "make" you money. If you can put together a first deal at your age that you are house hacking and paying equal or less to own as you would to rent, paying down principal and starting to build equity even without appreciation, and get some depreciation to offset tax liability on income you do make..... at 20 years old, you are WAY ahead of 99% of people your age!!

    1Reply
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