Very disappointed in BP RE: house hacking 3-4 unit

Roselle, IL · Member since 2016 · 131 posts · 31 votes

For the last few months, i've been VERY eager to start my vision of becoming financially free through the house hacking method. I've listed to MANY BP podcasts explaining how people buy a duplex or 3-4 unit property with an FHA loan, 3-5% down.... NOT ONCE have I heard them mention the "self sufficiency" rule!!!

The last few months i've been searching for a job in a specific area of my state to make sure i'm putting myself in the best potential area to make a house hack work on a 3-4 unit property. I found an excellent 4 unit... Cashflows $500 a month with me living in the 4th unit....still doesnt pass the self sufficient test per FHA rules....can't find much better around here. VERY frustrated i've never heard of this in all the hours of podcasts on house hacking i've listened to.

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Tchaka Owen

Real Estate Agent · Merritt Island, FL · Member since 2017 · 974 posts · 1k+ votes

@Steve Balinski - you mention that you (sic)listened to MANY BP podcasts.....what is possibly the most common theme with the various guests? It's the one thing every investor has encountered: failure.

How did you miss that lesson? The reason the guests are on there is because they did what all successful investors do after a failure: pick themselves up, dust off the dirt and go at it again. Just about everyone here who has done deals has failed at some point. Most of us have failed numerous times. So.....

You can blame BP, you can whine and quit, OR....you can pick yourself up and run at that 4-plex and find a way to make it happen. Hopefully you'll go with the last option.

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Crystal SmithPro Member
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Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
6y
Originally posted by @Steve Balinski:
For the last few months, i've been VERY eager to start my vision of becoming financially free through the house hacking method. I've listed to MANY BP podcasts explaining how people buy a duplex or 3-4 unit property with an FHA loan, 3-5% down.... NOT ONCE have I heard them mention the "self sufficiency" rule!!!
The last few months i've been searching for a job in a specific area of my state to make sure i'm putting myself in the best potential area to make a house hack work on a 3-4 unit property. I found an excellent 4 unit... Cashflows $500 a month with me living in the 4th unit....still doesnt pass the self sufficient test per FHA rules....can't find much better around here. VERY frustrated i've never heard of this in all the hours of podcasts on house hacking i've listened to.

You're disappointed in BP, but you didn't describe in your post what the self-sufficient test is to educate others in the post. (Please note: I came straight to the top of the post and didn't read the comments) The self-sufficient test, independent of FHA, is run by every professional real estate investor. Once projected income is determined based on either actuals or a market assessment of comparables rent you then deduct all expenses, taxes, insurance, repairs, maintenance, property management & .... VACANCY RATE. Yes even if your property is fully occupied you assume a vacancy rate which ends up reducing the cash flow projections.

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Jonathan KlemmBusiness Member
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Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
6y
@Brie Schmidt - That is amazingly awesome service you are providing your clients. All they have to do is sit back and make the decisions - all the time-consuming analysis is done before they even see the deal.
Any brokers working with house hackers should implement that process immediately! Awesome work brie!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Russell Brazil:
Ive mentioned the FHA self sufficiency test at least 50-75 times in the forums.
the podcast are for entertainment purposes.. not drill down to every specific of how to do a deal thats up to you the investor buyer
cant blame the pod cast guys..

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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
6y

Your agent should have been aware of this before even showing you the house. That is why it is important to work with and agent proficient in investing

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Nicole Heasley Beitenman
Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
6y
The BP podcast is not a step-by-step road map. It's still your job to do your own due diligence.
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Michael Facchini
Lender · Chicago, IL · Member since 2017 · 438 posts · 193 votes
6y
@Steve Balinski, I'm sorry to hear you've been misguided on this journey so far. Unfortunately, it's not uncommon for lenders to botch up the financing on multi-units, as the vast majority of lenders are not experienced with navigating and funding these property types. Sounds like you've been on the receiving end of some inaccurate/incomplete info. But as the professionals above mentioned, it's all about building the right team - and that goes beyond the lender. I advise you work with not just a lender that knows 2-4 units VERY WELL (and funds more than just 1 deal every couple/few months), but also a well-versed agent, attorney, home inspector, and insurance agent as well. Furthermore, I'd advise working with a lender and agent that invest in multi-units themselves. The right team will make sure to pave a smoother path and will save you time, headache, and of course money. All the best as you get things back on track, and stay with it my friend! House-hacking is worth the effort and challenges!
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