All Forum Posts by: Shaneice J.

@Brent Coombs

Hello! and thanks for the feedback! To clarify:

I can get a higher loan amount, I just dont want to. The reason being is that this is my first property and I am anticipating surprise expenses. A lesser loan amount allows me to keep the mortgage within my budget. I will still have income coming in from my FT job therefore if I have a higher vacancy rate or any unexpected repairs etc I will still be able to pay the mortgage. To sum it up I am only biting off what I can chew! 

Although I am keeping my eyes open for any great deals within my 100k-150k range I am primarily focused on finding as you put it a "super bargain". Which is why Im looking first at HUD, foreclosed, tax lien properties etc. Yes, it may be harder to navigate with the FHA loan however I do think it's possible to find a property in that situation that's in good condition and does not need many repairs.

I really appreciate you taking the time to respond and thanks again for the well wishes! I will keep you updated. 

@Crystal Smith You are awesome thanks for taking the time to reply.

I understand completely what it is your saying and it's actually given me a different perspective. Thanks for pointing out the Capex. The saying "you make your money when you buy" is true for a reason. As far as putting the property in a LLC, I thought it would make sense to protect myself from as much liability as possible. I will research the banks policy regarding this before making that move. It's not something that has to be done immediately but I intend on owning several properties ... seems like it could get messy if they're all under my name and something unfortunate happens.

 That's exactly what I intend to do! However I am enjoying the process of learning right now from vets like you! Thanks again! Will keep you posted

@Account Closed I spoke with a lender yesterday and it turns out my situation isn't as bad as I initially thought. Upon purchasing free trials from the 3 credit bureaus website my credit is 50 points higher than what was being shown on creditkarma.com (I encourage everyone who uses that site to also get scores from the actual credit bureaus... You'll be surprised). Joe you should check out this website http://www.ihda.org/homeowner/gettingLoan.htm there you will find the first time home buyers assistance programs. They even offer a list of lenders that deal specifically with IDHA loans. Even though you've already purchased a property you may still be eligible to use the assistance for your next investment as long as its not inside the same county as your first property. Please feel free to send me an email if you have any additional questions. There's nothing like free money! (although w/ one of the options you have to pay the assistance back so 5k/30yr loan =$41/month) 

Thanks guys!

@Daniel Sprague

Great point! When I was renting I stayed in the same small apt complex for more than two years. Do you think that rental history would count? I just recently moved. Also the rent was paid in cash and I was only given paper receipts which I didn't retain (or will have to dig to find) 

Do you think it will beneficial to work out a system with relatives where I pay a portion of the rent and they keep it documented?

@John Casmon 

Hey there! Thanks for taking the time to reply. I am looking in the Hyde Park, Oak lawn,(near Chi state), as well as the Pilsen neighborhood. However I'm not dead set on any particular area, im more interested in the best deal. Chicago only, not interested in the suburbs just yet! John, from your profile you seem to have much experience in the multi family/ buy and hold game. Hope you don't mind I'm going to send you an email to further discuss team building contacts you mentioned as well as local real estate investing.

@Jesse Peña Thanks for the warm welcome!

@Alex Saleeby

Hello, Alex 

Thanks for your feedback! I have a few questions regarding your remark

" remember that you can buy additional 2-4 unit properties using FHA loans"

How long do you have to wait to purchase another property using FHA?

Is there a legal limit to how many FHA loans you can have?

Also, I checked out your profile and you seem to have 10+ years in various sections of real estate. What is your biggest tip for an investor looking to buy and hold?

and this is a lil' off topic but how is the Austin market for single family & multi unit properties for an investor looking to buy & hold ... or maybe even house flip? 

Thanks again, sending you well wishes from the Windy city!

@Logan Allec

Thank you so much for your feed back! I downloaded the FHA spreadsheet you have linked. I am going to practice using it now by crunching real numbers using four-plexes currently on the market. I do have one question, what did you mean by

"Your priority at this point in life should be setting yourself up to build your balance sheet over the next few decades,not necessarily your current profit and loss statement via passive cash flow".

Can you please elaborate?

Thanks again!

Hello BP community, 

I am a long time "lurker" on this site so please allow me to introduce myself! My name is Asia and I'm interested in house hacking/cash flow through an FHA approved multi family property. I have put together a plan and would like the communities feedback/ tips/ suggestions on if there's any holes in it.

About me: I'm 23 and moved to Chicago a few years ago to attend university. I became interested in real estate when I realized how difficult it is to start your own business. Especially with no time (because you're always working) and no money (because it all goes to bills, groceries, and parking tickets). 

Goal: To obtain a 4 unit property with an FHA loan. I would reside in one unit and rent out the other three units. I want to be able to house hack the property (live virtually rent free, while tenants pay mortgage and other non repair related expenses) as well as create sizable cash flow (minimum 1k per month) which would be reinvested into buying more real estate. My ultimate goal is to buy enough property within the next 3-5 years so I'm able to quit my full time job and live comfortably off the cash flow (while also reinvesting it back into real estate). Thus allowing me to focus more of my time and energy into investing in my brand/ building my own businesses.

Obstacle: Currently I am on the hunt for an experienced FHA lender who accepts credit scores between 600-620 (due to having less than 2 years of established credit history and 2 accounts in collections, one is completely paid off but remains on report, the other is from school and is only $991) To build my credit I have 2 credit cards, I only utilize 10% monthly and pay in full & on time. Currently I only have a couple thousand saved, but I have drastically reduced my living expenses by moving in with relatives so I am no longer paying rent (which was 1k) I also anticipate a higher than average tax return this year which I'll also save. So as of right now my biggest issue is finding an established FHA lender who understands how the loan works and is effective in securing them.

Plan: When you have a credit score under 680 most lenders require at least 3 months of PITI (principle/interest/taxes/insurance) in reserve. By the end of March I anticipate my savings to reach 7k (a conservative estimate). In Illinois IDHA offers two assistance programs for first time buyers in the amounts of 5,000 and 7,500. The rules for each varies but in any case you can use the money for closing cost or the down payment (however you must contribute $1,000 or 1 percent of the purchase price, whichever is greater).

Steps to ownership:

• Find lender, get approved for a loan of 150k or less
• Find Agent who specializes or is familiar w/ FHA loans
• Purchase a foreclosed, tax lien, HUD owned, or short sell multi family property

1. *this option is the most cost effective, but also the most difficult because of FHA guidelines which is why I need an awesome real estate agent!

• Verify that property passes the Self Sufficiency test 

1. *this is a rule for multi family properties purchased using FHA. "The self sufficiency test states that the maximum mortgage is limited so that the ratio of the monthly mortgage payment, divided by the monthly net rental income, does not exceed 100 percent". (Thank you Mark Hafeli @ chicago reinvestment I learned this from your site/BP! I copied the definition as to avoid confusion..hope you don't mind)

• Utilize IDHA assistance program to put down 1% of purchase price

1. *by using this option it leaves all my remaining savings available for PITI reserve

• Ask the Seller to cover the closing cost OR have the closing cost included in FHA loan
• After closing on property get insurance (umbrella too!), take property out of my name place in LLC, open separate bank account for rent checks to be deposited (although, I may just have the rent checks go directly into my betterment account so they can earn more interest)

Of course after this step the process begins for renting the units (if they're already not leased ... a girl can hope right?) Then I'll slip on my property management hat (Still learning and assembling a plan for this role) But I really do look forward to it! I'll get to learn a lot and dare I say it sounds like it may actually be "fun"!

So BP community, with the details given am I missing something? Is minimum 1k cash flow per month too optimistic? Has anyone had success purchasing foreclosed, tax lien, short sale etc properties using FHA? If so, any advice? Has anyone used the Illinois first time home buyer assistance program? Also lawyers, any advice on those?

I would also like to add as a side note that I've done my due diligence in understanding several real estate investing rules/ definitions. For instance I know the 1% rule (although personally I want to adhere to 2-3%) The 50% rule, The 70% rule, what is Cap rate, what is NOI and ROI, what's cash flow & how it works etc. Some things I left out in fear of being too redundant or coming off as a "know it all" because I defiantly don't Lol! 

I didnt expect for it to be so much writing, but if you made it this far thanks for taking the time to read and hopefully offer insight. I look forward to everyone's responses and learning as much as I can in the process.