When is the right time

Question

Drew Sygit · Answer

If I was starting out again with what I know now, I'd look to acquire a 2-4 unit property with an FHA 3.5% low-down payment mortgage.

I’d also look into using an FHA 203k renovation loan, allowing me to buy something ugly, thus unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower.

To maximize my cashflow and gain landlording experience, I’d do STR and MTR in the other units, as well as the other bedrooms in my unit.

Since most cities won’t allow basement rental units, I’d consider finishing the basement, just well enough for me to live down there (cities don’t care if owner chooses to live in basement), so I could rent out ALL the units/rooms.

﻿I’d save all my cash and look to refi the property in 1-2 years out of the FHA mortgage, so I could use it again if necessary. Depending on how close I was to having 20% equity in the property and being able to avoid PMI, I’d consider using some of my cash to pay down the mortgage when I refinanced. Otherwise, I’d save my cash for the next acquisition.

I’d also be posting on every social media platform and telling everyone I knew that I was looking for more real estate deals. I’d aim for low downpayment land contracts and lease options.

﻿After refinancing out of the FHA mortgage, I’d evaluate if I wanted to repeat the 2-4 unit FHA 203(k) process again or if I had the 20% down to target 5+ units.

﻿While still living in the property, AFTER the refi out of the FHA mortgage, I'd also explore securing a HELOC to tap my equity for emergencies.

Good luck with whatever you decide to do!

Arman Ahmed · Answer

Hey Dante, honestly, you’re in a great position to start. With almost no monthly expenses, I’d at least get preapproved and start looking so you know what’s actually possible, without feeling like you have to buy right away. A house hack can be a great first step, and I’d also compare Midwest markets like Ohio if you’re open to investing outside Detroit. The key is finding a deal that works conservatively from day one.

Ken M. · Answer

You sound like a very responsible guy. So, I'd consider doing Subject To and  Wraps, it requires discipline but will catapult you into wealth if you do it right (legally).

Gregory Acs · Answer

I don't think there's a one-size-fits-all answer. I'd focus less on hitting a certain down payment and more on whether you're financially ready to own the property. That means having enough reserves, understanding your financing options, and being comfortable with the monthly payment even if you have a vacancy or an unexpected repair.

Since you're living rent-free and have very few expenses, this is a great time to prepare. I'd consider getting pre-approved now so you understand exactly what you can afford, then start analyzing multifamily properties while you continue saving. That way, when the right deal comes along, you'll be ready to move with confidence. If you'd like to talk through different financing scenarios or see how a house hack could look with your numbers, I'd be happy to help.

Jaron Walling · Answer

@Dante Getaw Jr You're in a better position than most investor were when they started out. I had to sell a motorcycle to pay off my car so I could jump start my journey, and I was 30 y/o. You're only 23!! Don't rush into your first property. Use this time wisely and level up off the playing field. Get your savings up, stay debt free, and starting using a CC to build credit. Within 2 years you'll have a concrete plan, know the market better, and be able to attack a value-add multi-family deal. Network with contractors and local investors and keep asking questions.

It was mentioned before but an FHA 203k loan could be an option for you. If you're able to save $20-30k in the next two years you could probably pull off a BRRRR depending on market prices. That's how I got started. I did an FHA, 30 year fixed, 3% DP, but after the remodel and seasoning period (6-12 months) I refinanced into a conventional loan. That dropped the mortgage insurance and created a lot of equity. That's the name of game if you're new REI. Cheers.

Bianca Barcelos · Answer

Hey - it's awesome that you're even thinking about it. I'd say the best bet would be to continue saving and learning while you're with Mom for now.  It takes longer than people think it does to educate yourself and analyze properties and get comfortable with the process.  The tricky and sort of daunting thing about going into a multi family house hack is that you become a home owner and a landlord all at the same time! Exciting stuff but it's a lot to take in.  You're doing all the right things in saving some money and learning as much as you can - at some point you just need to make the move! :) You might stumble and fall but you'll learn more by doing than anything else and you'll get right back up - this is a great asset class to get into.

Best of luck with it but you're right on the right track.  House hacking is a great way to get started.  Once you identify that first property or what you want your first house situation to look like, start thinking ahead too.  Do the math on living there for the short term and then on what that property could stand to earn in a year or two when you (likely) move out and move onto another space.  What does that income potential look like with another tenant?  Then rinse and repeat! You'll be a pro in no time.  Make sure your math includes all of your safeties too - reserves, rehab/renovation cost, holding/vacancy cost, capex, etc... all the "uh oh's" and "what-if's".  If you have any questions on what any of that means, you're in a great spot to learn!

Keep asking questions.

Hayden Gray · Answer

House hack a duplex or triplex. I'd recommend setting up the other units as MTRs so you can get a higher return. This would also be a great way to learn property management and get your feet wet

Aaron Zimmerman · Answer

I would house hack first as often as you can. With today's interest rates, it will Be almost impossible to cash flow while living there and perhaps even post move out.

Wale Lawal · Answer

@Dante Getaw Jr

You have an amazing chance to be prepared for the fact that you are going to have the possibility to benefit from the low cost that is going to allow you to save money fast. With pre-approval, you will be able to familiarize yourself with the real estate market in Metro Detroit without buying anything in case you find a really good deal on a small multifamily building.

Good luck!

Michael Eskenasy · Answer

You’re actually in a strong position because your current cost of living is almost zero. I wouldn’t give that up just because you feel like you’re supposed to “start investing.”

But I also wouldn’t sit on the sidelines.

Get pre-approved now, figure out exactly what a duplex/triplex/4-unit looks like at your income and 3–5% down, and start underwriting real properties. You don’t have to buy anything.

For a first house hack, I wouldn’t make “cash flow on day one” the only test. I’d ask whether the other units reduce your own housing cost enough, whether you can comfortably carry the property if something goes wrong, and whether you’re buying something you’d still be happy owning 5–10 years from now.

Your free-rent situation gives you something most buyers don’t have: time. Use it to get selective, not passive.

If you want, send me your income, approximate cash available, and the Metro Detroit areas you’re considering. I’m happy to pressure-test what your actual buy box should look like.

When is the right time

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