All Forum Posts by: Matthew Porcaro

Hello all, I'm currently finishing up the rehab on a 2-family I picked up last year that I intend to rent out both units for. In the meantime, I've been saving, and I'm looking for suggestions of what my next move should be. I'm 26, live in New York, and I'm getting married at the end of the year. I would like to posture myself well over the next year, and want to know the best way to do it with my available resources. The New York market right now is fiery, and even foreclosures are going for $350k. I would love to continue to do what I just did, but those deals simply don't seem to be out here. Can't find anything that cash flows with a mortgage and taxes on it. The average home in my area has roughly $10k per year in taxes. I've been thinking about looking out of state, but that's obviously intimidating. I could probably even look for smaller apartment buildings out there, but again, that's something I'm not sure is worth the squeeze. I understand this is a pretty open ended question, I just want to get my juices flowing to plan an efficient next step.

Look for job growth primarily. Population growth/migration to the city. Here in New York people are leaving in droves. I'm sure it's the same with Cali. 

Digging deeper, if you're looking to buy and hold investing, check if they are landlord friendly states with good eviction laws. Typically red (republican) states have the most landlord friendly laws, so that's a good place to start. 

Can you PM me more info please?

I'm not familiar with any radius clauses or the like, but I have heard that you're only allowed to have one active federal loan in use at any given time. I'm not sure if VA and 203k/FHA loans can both be open under the same applicant.

I'm currently in the process of rehabbing a duplex I bought with the 203k loan. There aren't many small multifamily properties in my area, let alone duplexes (I got lucky on this one), but it was worth being picky about. Like @Erich Beyer stated, a 203k is your best bet in your situation because, while you have to do the rehab and work, you will be able to instantly force equity into the home, and can refinance out of the FHA almost immediately.

As for renting out the property, by legal standards, your intent should be that you are moving into the home as an owner occupant. You have no intent to rent it out, nor will you be allowed to under FHA standards. While this loan is meant to subsidize the housing market and get first time home buyers into homes with less of a financial burden, they have no real way of policing much more than the one year they state in the contract. Many outside factors can happen that they cannot control. That said, if you find a good enough property that you can build in enough equity immediately, you can refinance out even before the year prosecution period is up, and be on your merry way into your next property. Ultimately, you are legally bound to living in the property as an owner occupant, and if they find out that it is being used otherwise they have legal ability to sue you for fraud and damages. (I've heard up to $10K, but it could be more).

Be patient and look for multifamily opportunities. FHA loans allow you to buy up to a 4 unit property. In those cases you can live in one of the units and still be almost sure that your loan is being covered by the other 3 units.

Use a mortgage broker that has worked specifically on 203k type loans in the past. Not "they've heard of it" or "they know of it" or "someone else in their company has done one". You want to make sure they're completely familiar with the entire process, because the underwriting is a major pain. It is a lot of paperwork, so be prepared. 

Got a duplex via 203k, definitely wish I could have found a quad! Gave me the RE itch and I am now looking for my next property as well. Welcome aboard. 

Made a post about my experience here:

https://www.biggerpockets.com/forums/223/topics/35...

still actively working on it, it really is a nightmare but if you find the right property to get into, and you are on top of your game for the underwriting process, it's the cheapest, best loan out there. 

http://203kcontractors.com/

Is your current house on a VA loan? You're only allowed to use one federally backed loan at a time. You can't open a 203k loan if you have a VA loan open currently. You'd have to refi out of your VA loan and then apply for the 203k for the new residence.