Getting started in Real Estate

2 Replies

Hi, I am a 24 y/o from KY and have been thinking about getting into real estate. I work full time and have saved up almost 70,000 in a savings account that is not earning much interest and I think I should put that money to work somehow. I also have about 80,000 in 401k funds. I own an 11 acre lot that I was planning on building a house on in the next year or so, but just the other day I saw a 4 plex for sale. The asking price is 290,000 and it is an all brick building built in 2009, all units are 2bed 2 bath with appliances and washer and dryers. I don't want to put all my savings down on an investment, but I read somewhere that you can get an FHA loan on a 4 plex if you live in one unit for a year. There are 4 more 4 plex's for sale on the same street that are identical. Id like to talk to the owner and see if they would sell those to me over the next 4 years. Would it be possible to finance all of them with FHA, moving from one to the other every year? Also, does anyone have any other ideas or investments that I could use to make my money work for me? Thanks!

@Steve Blevins that sounds like an excellent strategy that I highly recommend.  Disclaimer, I know nothing of this property other than what little details you have said but a 4 unit 2,2 with washer drier is generally highly desirable in any area.   By living in the rental you will get much better financing options than as an investor.  Your return should be much higher as well.  My wife and I did this exact thing on a duplex nearly 16 years ago and we are still reaping the benefits from that decision.

@Steve Blevins do a search on BP for "house hacking" that is the term for living in your rental. Yes, you can get an FHA loan on a MFH less than 4 doors. So you could purchase that 4 plex and live in one of the units. You can not purchases all of those 4 plexes and move into them one every year. You can purchase them one at a time and move when you close though. That can be tricky to pull off though. You are required to live in the property you purchase as your primary residence. Creative thinking though! House hacking is IMO the best way to get into REI. However, do pay attention to the fundamentals of REI and still try to make a good purchase that has cash flow. Always budget for property management even if you are living in the property and choose to manage yourself.