Fort Walton Beach, FL · Member since 2017 · 38 posts · 28 votes
Hey everybody this is my first time posting and I will try not to take up too much space. So to make a long story short I have recently become obsessed with real estate investing and learning everything I can to get my foot in the door. So I think I have decided on house hacking to not only live rent free but learn the ins and outs of being a landlord. Problem one is I only have about 2500 saved up so I'm thinking about an FHA loan for the 3.5%. first does anyone have any bad experiences with FHA loans; and how would I go about getting funds for rehab costs if needed? Also what is involved with cash out refinancing? I want to expand my rental portfolio as quickly as possible, how long do I have to wait to do the cash out? Any help would be greatly appreciated!
Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Andrew Martin - Welcome to the Bigger Pockets community! Keep reading and asking questions.
I really like house hacking, especially with a highly levered FHA loan. House hacking is defined as renting out part of your home to tenants or buying a 2-4 unit multifamily (duplex/triplex/quad) and renting out every unit you don't occupy.
The most successful real estate investors are GREAT at budgeting and saving. Make sure you're continuously building your gratification-deferral skills. (Are you willing to put off that vacation or going out to eat every Friday in order to save up a bigger down payment?)
Talk to a mortgage lender to see where you're at in terms of loans they can pre-qualify you for.
How's your W2 income?
Credit score?
After that, think about where you want to buy and for how much.
Then spend 30 days minimum just looking at potential deals. What's a fair price for the neighborhood? If I rented out a spare bedroom or an apartment, how much rent would someone reasonably pay?
Then, you'll know a good deal when you see one. Get on a real estate agent's database email list and get first notification of foreclosures / REOs and multi-family units hitting the market in your price range and in the areas where you want to buy.
Then, tour properties and make an offer via your agent. Negotiate the best price you can. Settle. Then rehab and rent out the other bedrooms for cash flow.
When you have less than 4 units in most states, you don't fall under codified landlord-tenant law, so if you're really cash strapped you can put the $1000-3000 in security deposits in your bank account and fix up your house with this money in the beginning. Make sure to pay it back / set aside the $$ for the security deposits asap, since you will owe the full security deposit - any home damages to the tenant within 14-30 days of move-out, whatever your lease says.
Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
9y
Have you ever owned a property before? Not for investment but personally? If you only have 2500 saved up, then save some more before you purchase a property, even for your self. A property is expensive, things break, and if you have no reserves to cover it, then you are going to be in trouble early on. If you want to expand quickly then you need reserves to work with. I am a new investor and I have $60K to play with and I can feel the pinch with that much money...
Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Andrew Martin - Welcome to the Bigger Pockets community! Keep reading and asking questions.
I really like house hacking, especially with a highly levered FHA loan. House hacking is defined as renting out part of your home to tenants or buying a 2-4 unit multifamily (duplex/triplex/quad) and renting out every unit you don't occupy.
The most successful real estate investors are GREAT at budgeting and saving. Make sure you're continuously building your gratification-deferral skills. (Are you willing to put off that vacation or going out to eat every Friday in order to save up a bigger down payment?)
Talk to a mortgage lender to see where you're at in terms of loans they can pre-qualify you for.
How's your W2 income?
Credit score?
After that, think about where you want to buy and for how much.
Then spend 30 days minimum just looking at potential deals. What's a fair price for the neighborhood? If I rented out a spare bedroom or an apartment, how much rent would someone reasonably pay?
Then, you'll know a good deal when you see one. Get on a real estate agent's database email list and get first notification of foreclosures / REOs and multi-family units hitting the market in your price range and in the areas where you want to buy.
Then, tour properties and make an offer via your agent. Negotiate the best price you can. Settle. Then rehab and rent out the other bedrooms for cash flow.
When you have less than 4 units in most states, you don't fall under codified landlord-tenant law, so if you're really cash strapped you can put the $1000-3000 in security deposits in your bank account and fix up your house with this money in the beginning. Make sure to pay it back / set aside the $$ for the security deposits asap, since you will owe the full security deposit - any home damages to the tenant within 14-30 days of move-out, whatever your lease says.
Investor · Chicago, IL · Member since 2010 · 504 posts · 191 votes
9y
There are 203K loans you can look into. Your local mortgage brokers can help get you through the ins and outs of this model because I am sure they have seen it quite a few times. Reserves are going to be a bit of an issue because even a bank will want to see healthy reserves in determining whether or not you can quality for the loan. Again, your mortgage broker can help you out with getting you the parameters you may want to hit before applying for a loan. Good Luck!!
Fort Walton Beach, FL · Member since 2017 · 38 posts · 28 votes
9y
Thank you all for your replies. I don't really have a lot of income as of right now, although I am willing and am currently practicing not spending any money on anything that isn't absolutely necessary, it will probably take me some time to save up a substantial amount. How much you recommend having set aside besides from the down payment? Say I plan on buying a duplex and rent out one half as well as maybe a bedroom in the one I occupy, now i have two units, what kind of reserves do I need at all times and for what purpose? Thank you all so much
Fort Walton Beach, FL · Member since 2017 · 38 posts · 28 votes
9y
Also I would like to add that at my calculations a mortgage payment would not only be lower than what I would pay to rent an apartment here in Orlando but also in theory I wouldn't even have to pay that because of my tenant in the other unit; so would my income from my job(about 450/week) be enough to cover any expenses that I might incur?
New to Real Estate · Falls Church, VA · Member since 2016 · 51 posts · 23 votes
9y
@Andrew Martin I am currently in the same place you are, in that I need capital to be effective in my deals. I have been talking to some local people and one way that I am trying to get this added capital is to wholesale properties. That maybe something that you will may want to check on.