Just finished the 3-day Rich Dad workshop... Now what?

Question

Hi all,

I just finished the 3-day Rich Dad workshop on real estate investing and I am eager to get started in this business. No, I did not sign up for their "Elite" training courses - I thought the $17k - $63k they were asking for could be better spent actually investing in real estate property (ha).

What I got out of the workshop was high motivation/inspiration and a wealth of information but not knowing where to even start. I'm overwhelmed to say the least. Before the workshop, my husband and I were pretty ignorant and getting ready to put a 20% down payment on a house to live in and take out a mortgage the traditional way. Now we are evaluating our options and thinking about using that down payment to buy a rental property instead. We were told a fourplex would be a good place to start. I have so many questions I don't even know where to begin but maybe I can start with these and someone can help us figure this out?

1. We were told we should start with the fourplex because we need four units to qualify as income (we live in Ohio). Is this true? A fellow workshopper rents out a single condo and said it counted as income for him so I wasn't sure which was true.

2. Do we really have to live in the fourplex if we get an FHA loan? For how long?

3. Where do we find a good deal on an off-market fourplex? If we shouldn't look on the MLS, where should we look? Any examples of pocket listing websites would be appreciated.

4. We eventually need to get a home for ourselves (we are currently in a small one-bedroom apartment and need more space.) How soon after getting a loan for the fourplex can we get another loan?

Sorry if any of the questions sound dumb - I really am a newbie in this! I do have more questions but they're a bit off-topic. I'll have to post a new thread. Thanks in advance for the help! :)

Account Closed · Answer

Lane Kawaoka ha yes I agree - glad I made that decision.

Michael Key · Answer

Congratulations and welcome. I'm going to jump right into the questions:

1.) I'm going with NO on this question. However I don't know what you were told exactly and it does sound a bit odd.A single-family home, duplex or triplex could cash flow if the math is correct. And that would by definition be income. That's why the statement sounds a bit odd. Spend some time around here listening to the podcasts and attend some of the free webinars. This site has been a wealth of information for us.2.) So we just investigated this ourselves as an option. And yes, if you use an FHA loan to utilize the 3.5% down, they require you to occupy it for 12 months.3.) It's not that there aren't deals on the MLS, it's just that the pickings are a lot smaller. I wouldn't discount not looking on the MLS.

4.) You won't be able to get another FHA loan, and the time frame will depend on a few factors, DTI, income and ability to come up with down payment. Some investors are closing on more than one house at a time. Starting out, there is usually a bit more time involved between deals.

David Thompson · Answer

Hi Sue Anne,

I'd also start going to some local REI meetups in Cincy.  My good friend and coach Joe Fairless (look him up on BP) hosts one.  Getting to meet other investors, many in the small MF market may give you some ideas to think about.  Coming out of these seminars, enthusiasm is high and you are motivated to find a place to live and rent, house hacking w/a duplex or fourplex sounds like a good place to start your investing journey.  Continue to mine BP podcasts on small MF investing.  Suggest also locating an investor friendly RE agent that can give you ideas as well.  You don't have to do this alone.  I'm sure the local Cincy folks (MF meetups, BP) can provide some contacts to meet with. Leverage local talent.

Kelli Bristol · Answer

I think buying and living in a 3-4 plex with an FHA loan is a wonderful idea.  It's hard to know about how you'd qualify using rents without specifics on your finances; it's best to discuss with a lender. There is no hard requirement on how long you need to live there, but you should plan on living there for the foreseeable future.  I think buying one that you'd want to live in is a good place to start anyway.  It may look like there are better deals in areas you don't want to live in, but the costs associated with lower quality neighborhoods are much more and so is the headache of dealing with lower economic tenants.  Getting a lender to give another loan, soon after the 4-plex purchase could be problematic due to the fact that they assess 100% the debt and obligations against you but not necessarily 100% of the income.  Again, talk to a lender you feel comfortable with for specifics on your plan.

What's wrong with working with a Realtor and the MLS.  Off market listings (at least in my market) are not necessarily better deals.  I buy and rehab and have yet to actually find a good deal with a "wholesaler" and 70% of my purchases are via the MLS.  A good Realtor will make the search so much easier.

Good luck.

Just finished the 3-day Rich Dad workshop... Now what?

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