I'm currently trying to get out of an apartment that I'm paying $1300 a month for right now, and I know I can find a 4 plex or more in which I could be actually making a little cash flow/house hack, I'm currently self employed and have been for three years (I believe might be an issue with the lenders), and have about 10K saved for a down payment, and I have a friend who wants to invest with me who has a large sum of money but bad credit so I don't know where to begin please someone at least tell me where to start? I have been looking at 4 plex but the prices are crazy high, I just keep reading more books but I know I need to act now and do something ! Please help :)
Rental Property Investor · Russellville, AR · Member since 2014 · 684 posts · 509 votes
5y
As for being self employed, most lenders only want a two year history. So, you may be ok there.
4-plexes are fun and sexy, but whats wrong with getting a duplex? Triplex? Don't get so focused on one thing that you miss something great!
Personally, I wouldnt invest with a friend. Especially not on my first deal and the place I will be living. People lose their minds when it comes to money. Tell that friend that you want to try it on your own first and then you'll call them when you are ready for deal #2!
Investor · Anchorage, AK · Member since 2013 · 229 posts · 133 votes
5y
@Nickelle Reagle Yea, just having more than one unit/bedroom will serve your purpose of moving from renter to owner. Remember lenders usually count the expected rent as income as well. Your constraining number to start will be sufficient reserves.
Real Estate Consultant · Anchorage, AK · Member since 2019 · 22 posts · 20 votes
5y
@Nickelle Reagle the first place to start is speaking with a mortgage professional and get prequalified. That'll give you an idea of purchasing power and what you'd need. If you can qualify by yourself you might not even need a partner. That'll give you a good jumping off point and help you key in on the potential properties on or off market.
Partnerships are great but you just have to be cautious. Setting expectations early and writing a partnership agreement are good ideas.
@Nickelle Reagle We are kinda of in the same boat, I have a bit more saved up so I am looking to BRRR a duplex or fourplex in south Anchorage. However, I am also having trouble finding a good deal because prices do seem high. I am realizing the 70% may not be achievable but that does not mean it can not be profitable. I am now starting to look off market for an FSBO or foreclosure to see what else is out there. Jaik has a good point, talk to a lender and see if what you can get per-qualified that will help you a lot in your decision making. Good Luck and keep us posted.
Flipper/Rehabber · Anchorage, AK · Member since 2017 · 223 posts · 177 votes
5y
@Nickelle Reagle if you're going to use your friends funds then you should have them transfer it now so it can season for 2 months before you start to try to buy something. You can quit claim 50% ownership to them after if that's what you agree but you'll still be 100% responsible for the mortgage unless your friend co-signs. As for cashflow on 4 plex's, there's lots of ways to run those numbers and lots of factors play into typical returns for a property type. Most FHA buyers in a midtown/eastide 4 plex right now are seeing $500-600 a month cashflow with the building fully rented out. I recommend using an FHA renovation loan to force equity and cashflow into the building.