Altamont, NY · Member since 2015 · 14 posts · 3 votes
Hello everyone,
My question is related to a house hack situation. I am a recent college grad with the ability to qualify for my first mortgage and move into an apartment building.
I don't have a lot of money out of pocket for remodeling a property, but can afford the downpayment and closing costs. Does this limit the kind of distressed property I can buy? How could someone in my situation find a property that needs some work and then fix it up? Is earning money from your job and then fixing it slowly a way to go?
There are a lot of articles about using the BRRR strategy and finding hard money for the remodeling, but what if that is to advanced for someone starting out? How would a first time investor looking to buy a fixer upper multifamily, to live in, make it work?
1) There is no limit to what property you can buy as long as you are trying to use the correct type of financing. For example, VA and FHA loans typically will not approve a home purchase that requires a lot of work; whereas a conventional mortgage will allow you to buy a true fixer-upper.
2) Talk to a realtor and lay out for them what you want and they will find a whole slew of properties for you. Look into estate sales. Look on the MLS, Zillow, talk to other investors in your area, there is no one answer for this question. In your situation, I would look for a property that you can live in on day 1 and repair bit by bit as you live in it.
3) Of course! You should still apply the same rules that you would for a fix and flip though (i.e. set a schedule, set a budget, prepare a statement of work, plan what finishes you are going to use etc.). If you follow that plan you may be able to move out and sell the property for a handsome paycheck and start the process over again.
4) Create your own method of investing that works for you. There are no set methods to use, look at things like fix and flip, wholeselling, buy and hold, house hacking, etc. not as defined methods, but as generalizations. If you talk to two investors that invest in the same genre you will find, once you dig deep enough, that they invest very differently from each other and according to what works for them.
5) Your last question can be answered by this simple statement: "Read a lot while all the while doing a lot" or in other words. Be absorbing every bit of information you can as you are actually buying, rehabbing, and selling real estate.
look into the fha 203k loan. Its still 3.5% down. So you can buy a distressed property 1-4 unit but i beleive you have to at the ARV into the 3.5% down payment as well i believe the bank will require a builder to do the work.
Or if you understand building like myself. Put all materials you buy on credit or get a private money loan from friends or family offering a reasonable % in return. Also remember the interest you receive on credit to buy material for your rental property is tax deductible along with the full cost of the project. Save all receipts and records for your tax professional
@Allen Fletcher Thank you for the very actionable steps and advice! I have spent so much time gathering theory by reading books and listening to podcasts, that it's time to actually start doing it. I am going to follow your advice and find a realtor and start narrowing down that type of property that will work for me.
@Jon W. I will have to do some digging into the 203k loan. I wasn't aware that the FHA loan had that possibility.