All Forum Posts by: Matthew Porcaro

Pat - you can do the same with your live in flip if you use an FHA 203k. Essentially, you're adding a rehab to a distressed property (ideally, a 2-4 unit so you never have to pay the mortgage) and after the rehab, you can refinance out and pull your money back out and use that equity to get yourself into your next BRRRR.

Hi Derek - my first deal was a House Hack that turned into a BRRRR. I did this using a 203k loan on a duplex in Farmingdale, NY (long island, just like you).

If you plan to rent out the property, you want to put the least amount down possible, since someone else is ideally paying your mortgage. An FHA loan lets you put down 3.5%. To get the property for an even lower price, I used the FHA 203k loan, to get a distressed duplex property in farmingdale, which allowed me to not only pay a low down payment, but fix up the property so I was able to refinance out immediately.

If you have any other specific questions on how to do this, let me know. I'm always happy to help. And I did this right in the market you're in...

This is an immediate red flag. Do NOT use a mortgage broker that doesn't have experience with FHA loans. This will make the process a nightmare for you. Trust me. I experienced it first hand.

Save yourself a headache and call around as many as you can, and look for lenders that are WELL VERSED in the loan, and have done it many times before. You'll thank me later. 

HUD homes require a good deal of work, and will usually have some unforeseen issues. That doesn't mean you can't be profitable. My first deal was a fannie mae foreclosure HUD property. Since I bought it with a 203k loan, I was able to wrap all of my rehab costs into the mortgage. I ended up with a home that appraised for much more than my mortgage is ($350,000 mortgage, with a $495,000 appraisal). This means I made instant equity in the deal!

Hi Kristopher - there's a lot to consider when going after an FHA loan. Typically, the requirements are:

• 3% down payment + 1.5% premium for mortgage insurance (this can be rolled into the mortgage)
• owner occupied - which would be fine if you're house hacking
• 580 min credit score
• Steady income for the last 2 years

I used this exact strategy with an FHA 203k loan (rehab loan). I put 3.5% down, then rehabbed a duplex property I bought which was a foreclosure. I lived in it until I was able to refinance out of the FHA loan, and now have a conventional loan on the property, and no longer need to pay a MIP every month.

If you have any specific questions on it on what's holding you back, please let me know. I did this as my first deal and suggest everyone do the same!

Your Realtor doesn't need as much experience with that, you just let them know your criteria of what you're looking for, and the loan officer does the bulk of the work on the FHA side.

Any chance of finding a duplex+ and house hacking for a year?

 What difficulties are you having?

203k - buy a duplex, tri, or quad. Live in it until you have enough equity to refinance. Move out, rent all units.

Use new rental property for HELOC to use as downpayments for more BRRRR's. Rinse and repeat!

Literally the exact strategy I started with and it's been a great journey since.

 Hey Kenneth - 

I was able to finance out of my 203k 8 months after my closing. 

Just know you need to build enough equity in the rehab to refi out. They typically can refinance up to 70% of the property value. Make sure that covers your 203k mortgage and then some if you want to pull money back out.