All Forum Posts by: Derrick Dill

FHA loan can be used on up to 4 unit multifamily (4-plex) with 3.5% down.

It's plausible as long as it's under 4.. you can have a unit in the front and 3 detached in the back in the back.

Kevin,

I suggest exploring the areas near your work and seeing which neighborhoods you like or see potential in. Start going to open houses to get a feel for the market (they're free). If you have around 18k saved up, you have more options available than you think with an FHA 3.5% loan, (rough estimate around 400k depending on your income). I'm personally not as big on Condos because they have home owners association fees, but everyone has their own strategy. If I were you I would house hack a multi family property. Good luck

Mortgage rates are at HISTORIC lows still, and will continue to be for a couple years. Trump has talked about limiting itemized deductions to 100k, I haven't seen anywhere about him getting rid of it. I have 3 properties and deducted ~20k in mortgage interest, 100k cap won't affect "small-time" investors too much.

If the rates are continuing to rise, it makes more sense to invest NOW before they rise further if anything, right?

Go with a duplex or even triplex and do both (first home and investment property)! Couple years down the road you can upgrade if you want/need and keep it as an investment property. There are some really nice, spacious ones for you and your family

Your issue is DTI (Debt to income): The lenders see that you have $$, but don't see that you're able to pay off the mortgage monthly.

There's a couple other factors that will come into play:

Do you have other debts? Student loans? Car? If yes, it will be harder to get the loan.

You can alleviate the DTI by getting a Multifamily, with rental income that will off-set the monthly payments. Ex. You buy a 4-plex, each unit rents for 1500$/month, you have a mortgage of ~5,000$/month. 3 units renting for 1500$=4500$/month that is offset, leaving 500$/month for your mortgage. You'll get nicer #s if rent is higher as well. Usually they only calculate 75% of projected rental incomes.

Your other options: Co-signor

Keep searching for another broker/lender (you'll probably get worse rates)

I would consider a lower purchase price multifamily if possible

Regards,

@Jay Hinrichs

There are great examples of exceptions to the rule, but, I'm trying to get the point across that capital expenditures should be in investors calculations. While there are many things that can be done to minimize the expenditures, I still want to encourage new investors to include them in their calculations for financial independence. I think we can both at least agree, better safe than sorry.

Rasheem,

Roof is a capital expenditure, all roofs will need replacements within 15-30 years. These need to be part of your financial calculations is all I'm saying. As someone working in the HVAC industry, you know that these will need to be replaced for your properties as well.

My criteria is buy properties with new/newer roofs, but I have in my calculations that they will need to be replaced in the future, and you should too. I'm not sure why so defensive as I'm trying to help you.

Raheem,

Morris invest has been discussed at length by several BP members who have done/are doing business with him and I encourage you to do your research here on their experiences. Financial freedom through real estate investing is not something that Clayton Morris invented or coined, but something he helped bring it to light.

While 6k can keep you financially free, I hope you have kept a 15k roof replacement in mind for all of your properties.

I'm a turnkey investor who has bought in Kansas City last year, off of E 89th in Raytown. I did my research and saw there's some crime in that area, but the vacancies are lower. My turnkey provider purchased the property at auction for ~70k (estimate). Renovated the property, and listed the price for sale at 110k, 5bd 3ba, rents for 1300$. It appraised for 100k, and they brought down the price to 100k accordingly. I continue to give them my business as my property manager.

Why didn't I just buy this at auction myself? I work full time as a Registered Nurse and love my job, I'm not a real estate agent, and don't want to be. I don't have the cash for auction, or the time to fly over there.

I'm sure my provider made good money off me, and I'm fine with that. Currently, my mortgage impound account is for <600$/mo (taxes and insurance included) and it rents for 1300$. I'm pleased with my returns and I'm well aware of the area.

I use money in my 401k and my ROTH IRA as reserves. They're invested already, and I have no intent in using them. I'm intend on using them to supplement my retirement, diversify my investments, and as reserves.