All Forum Posts by: Christian Allen

I used an FHA loan for my first triplex to househack and after a year would like to use an FHA loan to househack another triplex. My mortgage broker told me I would have issues with this because the underwriter would see that I moved so quickly from one multifamily property to the next and question the reasoning for moving.

Has anyone had success in using an FHA loan within ~1 year after originating the first? Any other strategies for using a second owner occupied low down payment loan for a multifamily househack?

Has anyone had success with buying an owner occupied multifamily investment every year using an FHA or low down payment conventional loan? My plan was to buy my first 5 properties in 5 years using these types of loans but recently I've heard that the banks may not approve loans if they see you are moving to a new property after the minimum occupancy requirement and gathering investments.

This strategy seems to be in line with Scott Trench's recent podcast where he was advocating house hacking until you can gather enough leverage to buy larger investment properties.  For me this would allow me to save my cash for the renovations and refinance with at least 20% after a year of fixing up the property.  

If anyone in the lending industry could share their experience on whether these types of loans can be secured around the year mark, I would be interested to hear others feedback.  

@Steven Tierney I can give my opinion on the Mt. Hope area of the East Side. The prices you see for the MFR are related to the desirability of the neighborhood. That area is known for having "higher" crime and as a result lower rents. The areas between Camp St and N Main St I wouldn't consider to be an area where you will get the best tenants. As you move towards Hope St the picture gets much better but you see how the prices reflect that.

Providence has some great neighborhoods apart from just the East Side but you do need to know where to look.  Depending on the area you can have a good street very close to a bad one.  This is typical for many urban areas.  I personally have lived in Providence for over 3 years and would be more than willing to answer any questions you may have.  

@Mack Perez not knowing much about wholesaling myself but quite a bit about the providence neighborhoods I'd start off by saying both of the areas you mentioned are two of the most solid investment neighborhoods.  Because of that they are pretty competitive (especially College Hill) but if you could find wholesale deals should be easy to find investors.  I'm a buy and hold investor focusing primarily on Federal Hill due to better cashflow and lower cost of entry.  

If you have any questions about the neighborhoods, I'd be happy to help.   

As I begin to look for a second buy and hold rental property in Providence, RI , I have begun to look more closely into the fundamentals of the city for growth and future rental increases.  The city is known for having high taxes and the state has struggled with creating/keeping jobs in RI.  Recently a few companies have announced they will setup "tech centers" in Providence which will create jobs but that is after being given a major tax incentive.  There aren't many clear benefits which would keep these companies in Providence after the tax incentives dry up.  

My question would be, should I continue to buy in an area which doesn't have a strong outlook for the future but currently has good returns?  I have a great knowledge of the city and neighborhoods which is valuable for determining deals as well as I can use the owner occupied loans to take advantage of lower down payments.  My fear would be a decline in housing demand and therefore lower rental prices.  

Just as an addition to the great response from Anthony, the website rentometer.com is a good resource I have used to get an estimate of the rental prices in an area.  It compiles a bunch of current listings within an area and gives the average.  Good for a quick scan of the area but you can double check listings on other sites (craigslist, hotpads, zillow, etc.) The first 10 reports are free so use them wisely ;).  

This is going to be my strategy moving forward. I started with a FHA loan on a 3 family and plan to refinance out after 12 months living there and get another 3 family with an FHA loan. For my next deal I wil use a FHA 203k loan to group the repair cost into the mortgage requiring even less saved cash. I'm only on my first property but would also like to hear about others who are further along with the 1 property per year strategy.

I agree with the others on the benefits of buy and hold investing.  I recently started by "house hacking" a triplex in PVD which each month creates about $200/month while I'm living there.  That allows me to live for free plus a little extra money on the side.  If I moved out of my 3BR unit to buy another, the property would generate around $1000/month depending on expenses and additional repairs needed.  I didn't purchase the property with this type of cashflow, I had to put in considerable amount of my own work to get it to it's highest cashflow potential.  

I believe the best deals in the current market are going to be ones that you can have significant amount of "value add".  Not much in this area is "turnkey" where you can but it at retail price and expect a high cashflow per month.  I would say even doing a little better than breaking even each month has the benefits of the tenants paying down the mortgage each month and in 30 years you'll have an asset which is worth hopefully at least as much as you bought it for.

Not going to quit your job overnight but it will put you in a great position to retire if you can collect even a few properties.  

He is a licensed contractor who has done these type projects in other towns.  The inspector had some of his own interpretations of the code which makes things difficult but there were a few clear misses.  I will wait to see what he comes back with and make it clear this was a mistake on his end.  I am willing to negotiate if it is something outside his control initially.   

My contract was for him to follow the local code requirements for locations of smoke detectors.  I did not instruct him on placement since I was not confident in my interpretation of the code.  He came out initially to take a look at the job and give a quote for the project.