Good morning!

I'm looking for some honest opinions and feedback on this :)

In November I left a job I wasn't happy at. I've acquired 2 certifications I needed in order to qualify for the company I really wanted to work for, which I now have been interviewed and told they're going to take me on, but not until they begin hiring on in 2 months.

I've been doing interior painting on taskrabbit for SOME income, but overall I have really depleted almost all of my savings. In 2 months I'll really be hurting.

I was incredibly inspired by Rich Dad Poor Dad and decided on beginning my REI journey. After two weeks of exploring on BP and many podcasts, etc. I decided on buying a fourplex and house hacking.

I'd like to know if anyone thinks that this is a great opportunity and time (i've got all the time in the world right now) to get into my first deal of a fourplex, or if it's a bad move.

Am I thinking wrong in this?

- The opportunity that I see is that by living in one unit, the other units cover the mortgage plus produce immediate cash flow, which can really help bridge the gap initially for me until I start this job.

- Luckily I have an interested father who is offering to lend me the downpayment necessary for my first investment. 

If I live in the fourplex for the first year, I can shoot for an FHA loan at 3%. I'll need my father to co-sign, I believe, since I don't have the income to prove but DO have very good credit. I'd refinance later down the road to help my dad get out of the deal.

I read in the BP email this morning that you really shouldn't begin investing unless you've not only got a job but also have been building some savings because you need some capital reserves. Is that right?

I'd love to be able to pull this off not only for my own sake but also to be an example that getting into REI is possible even when you're scraping by. But, before I do something like this I wanted to see if the greater minds on here see more risk than I'm seeing.

Also.. one more question.. I've been told by an agent that I should go get pre-qualified before I start to look at fourplexes to buy. But, if I go pre-qualify (with my father co-signing?) how long of a window does the pre-qualified loan last for? Is it similar to a car loan where you can get pre-approved but need to find a car within 30-60 days?

Thanks everyone

Hey Carly,

I would highly recommend house hacking as your way into the real estate game. There are so many benefits and its a shame more people do not do it to get started. 

I would make sure you speak with a lender first before assuming it is ok for your father to co-sign on the loan. Last thing you want to do is go through all of the emotions of finding a property to find out you never qualified in the first place.

Also, you will need reserves in the bank. Whether your lender requires it or not, I would not recommend going into a property (especially) a fourplex with little to no money in savings. All it would take is one major repair (replacement furnace, apartment damage or etc) to create a tough situation.

With that said, I would not give up on the idea. Here is what I would do:

1) Find yourself a lender, explain your situation and your goals. They will let you know if you will qualify for a loan or what your next steps are in order to qualify for a loan.

2) Do what the lender tells you to do. 

3) Come up with a plan of action based on what you now know and be patient! Do not rush it if you do not have much money to start with. Even if you could somehow get approved for a fourplex, what good is it if you only have $2,000 in the bank. Its trouble waiting to happen. 

Good luck and let me know if you have any questions!

@Brandon Rush That's great insight! Ok, sounds good. I can definitely speak to banks and credit unions to see what I need to do in order to qualify. I figured I may need to wait until I'm working and save up a bit before I can get a loan, so if that's the case then at least I'll know for sure after speaking with them. I agree, I can't believe I didn't know about this years and years ago. I would have started in my early twenties, for sure. But better late than never!

Thanks for your help. What is the incentive for everyone on here? It's incredible how fast you all are to respond to my posts, and I'm just curious what all of you get for being so helpful to newbies' posts.

Haha no incentive here, I just like to post and help out. I personally find it fulfilling to help those who want to be helped as the average person could care less about real estate investing. 

When I first started (which was not long ago), I was super happy when someone would respond to my post with a detailed response. All I am doing is returning the favor to the next person. 

@Carly Turow

For a non owner occupied co-borrower (dad) you can only buy a single family with 5% down minimum. Or you can wait until you get your W2 job with pay stubs and go to a lender for a 1-4 unit FHA/conventional loan.

@Marc Rice OH wow, super helpful to know that. I wasn't sure how it would work bringing my father into the deal, but now it makes more sense. Sounds like I'll need the job for a bit first. Alright, thanks so much!

Hey while we're on this subject, here's another relevant question:

If my boyfriend is able to sell his house in Tampa (after his lawyer successfully evicts the squatter) and he does a 1031 exchange, he wants to roll that into a new investment (the fourplex we will live in). Does it help when two people apply for a loan together when both have good credit (750) while one has the funds and regular income proof and the other doesn't? That may be a question for lenders rather, but figured I'd ask in case you had an idea. 

Thanks for your help Marc

@Carly Turow

Good luck!

@Brandon Rush That's awesome, I plan to do the same once I can get myself up and rolling. Just like with nutrition (I'm a NASM CNC) I often lend my knowledge to anyone who's curious enough to actually soak up the free insight. So I appreciate you paying it forward and I will as well.

I'm curious.. if you started not so long ago, where do you stand currently with your REI?

I'd start by talking to a bank.  You are going to have problems getting a mortgage if you have no job even if your dad co-signs unless his income is high enough that he could qualify on his own.  

Your idea is a good one and yes you will need savings.  You will need money to close on top of the down payment, and for inspections.  Keep enough savings for several months of problems with rent and access to money in case something big happens (eg new roof, plumbing problems, appliances in two units break at the same time).

@Theresa Harris Oh Wow, see this is why you guys are amazing. I wasn't even thinking about closing costs and inspection! Alright, I'll make sure I get the job, save up, and then go apply for funding :) Thank you so much!

Originally posted by @Carly Turow :

@Brandon Rush That's awesome, I plan to do the same once I can get myself up and rolling. Just like with nutrition (I'm a NASM CNC) I often lend my knowledge to anyone who's curious enough to actually soak up the free insight. So I appreciate you paying it forward and I will as well.

I'm curious.. if you started not so long ago, where do you stand currently with your REI?

Right now I am currently house hacking my first property which is a triplex in New Britain, CT. I have been a actively hunting and putting offers in for my next investment property but nothing yet. I am pretty confident I will be able to pick something up in the next month or two. 

@Brandon Rush that’s SO cool. What’s your long term goal? A handful of properties? Or like.. hundreds

Hi Carly, 

I agree with the recommendations shared by my fellow investors. I'd also like to add these recommendations based on what I've learned and experienced:

~ House-hacking is the way to go

~  Practice using the BP rental calculator.  Leave emotions out of it. If it doesn't make dollars, then it doesn't make "cents" (huge area of growth for me)

~  I started investing over 10 years ago. I was hooked after watching a Calton Sheets infomercial (lol). I later bought and rented three properties. I had NO idea what I was doing. Section 8 one year wanted me to make at least one costly repair on each property. That's when I said, "I'm out!".  I short-sale one, did a Deed in Leu of foreclosure for another, and kept the duplex that I still live in. I vowed I would not begin investing again until I had at least $20K in the bank. I don't have the bold personality to do those "no money down" deals, because they borrowed all the money they needed from family and friends.

~  If you have a retirement account, take advantage of the CARES Act that allows you to take out up to $100K penalty-free. Then open a Solo 401K account to invest that money. I followed this advice but opened a Self-Directed IRA (SDIRA). Then I bought a turn-key new construction property in Texas inside the SDIRA. I've since learned that the SDIRA is a bit restrictive and it will not allow me to take all of the tax benefits on the property. On the bright side, my cash flow will grow tax-free and the house will be paid off in 10 years. Using a Solo 401K is preferred because it is more flexible with how you invest. Unfortunately, my retirement plan does not allow me to transfer money to an outside account. So I took a loan out instead to purchase and renovate the new property. I did not want it in the SDIRA.  (source - Morris Invest and Mark Kohler on YouTube)

~  If you live by yourself, consider using Airbnb to rent your furnished unit and sacrifice comfort for a few months by living in an empty unit. I started a shared housing community for women in 2018.  I've found that they take better care of my property than when I rented the unit to families. Renting by the room has a higher cash flow and can off-set when someone loses their job or you have a vacancy. I just closed on a 4 Bd/3 Ba single-family that I will house hack and rent out the other three rooms via Airbnb and/or working with human service agencies to provide housing for their clients. (Good source - Airbnb Automated on YouTube)

~ Continue your investing education. I wanted to be better educated and prepared before re-starting my investing. I spent all of 2020 investing in my education; I took an REI coaching program, tax lien/deed course, Tax Wealth course from Wealthability, Overages course (tax foreclosures sales), and watched hours upon hours of YouTube videos of successful investors and advisors. It has made a HUGE difference in how I'm investing now. 

~  It helps to have a team of smart seasoned people to support you - CPA, Bookkeeper, investing coach/mentor, lawyer, conventional and hard money lenders, and a real estate agent who is also an experienced investor (really huge!)

I hope this helps. I wish you much success on your journey!

Wow @Renita G Ezell that was so elaborate and really great information! I love hearing the full overview of other peoples story - the ups and downs all included. Thank you for the inclusion of the helpful sources too! Sounds like you really are investing in yourself as much as your real estate. I’ve been doing my “research” all day every day (literally non stop) and I know this is a field of never ending learning and education, which is totally fine and I welcome that. Thank you for the heads up and recommendations ! The value here is incredible!!