Bought a Oakland 4-plex to house hack and hold

3 Replies

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Buy & hold 4-plex with deferred maintenance. Below market rents, FPE panels, fuse subpanels, mold, leaky roof, non-compliant sewage lateral, and dated units.

What made you interested in investing in this type of deal?

30-yr fixed-rate FHA loan interest at 2.25%/yr; a block away from two major roads with commercial properties; the good side of MacArthur Blvd; good foundation

How did you find this deal and how did you negotiate it?

Off-market deal through family contact. Negotiated cost of sewage lateral repair.

How did you finance this deal?

FHA loan

How did you add value to the deal?

Sweat equity by addressed deferred maintenance and modernizing a dated unit

What was the outcome?

Closed the sale in Feb 2021

Lessons learned? Challenges?

FHA self-sufficiency test is a real thing and can affect your down payment. Don't trust your loan officer who isn't worried about it unless he convinces you with his or his calculations.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I'm an investor agent with a track record (primary residence, house hack, flips, rentals, and real estate sales). I recommend myself to others.

@David Lao  Nice! Yes, the self-sufficiency test is brutal (especially in high cost-of-living areas). When someone asks for help/advice on how to find a good realtor/lender I say to them "ask the lender/realtor if they know what the self sufficiency test is. If they don't, find one who does."

And when we have clients who want to offer on a 3 or 4 unit property, we go to the lender first and ask if it passes before we submit an offer. 

Congratulations @David Lao

Yes the FHA self-sufficiency test is real. People think it's as easy as many online/social media gurus makes it look.

I don't even waste my time on any client that could not pass the test if they are using FHA Loan.

Keep us updated on the rehab and the final outcome.

I like the plug that you are an investor-agent and that you recommend yourself to others.

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