Recent college grad looking to househack a tri, 4-plex deal

[Morgan Madill]

Hey BP! I’m a recent college grad with some real estate sales experience. Moving to a new area to work a steady W-2 job in Midland, MI area. Lenders can use college transcripts plus employee agreement in place of 2 years W-2s to get me approved for a mortgage. I am aiming to househack a multi-family deal (triplex, fourplex) as my first investment. Does not have to cashflow when I live in it. After a year I intend to move onto next multifamily deal, initial property will cashflow at this point. I want my purchasing power (1/3rd debt to income ratio) to be equal to or greater than my purchasing power before initial property. My goal is to build a cashflow positive portfolio of multifamily (tri, and fourplex) to eventually 1031 and get into larger multifamily deals of 16+ units. What’s your critique of the plan, tips, tricks, and things to avoid in addition to what your strategy would be if you were a recent college grad working a steady W-2?

Thanks BP!

[Caleb West]

@Morgan Madill

I ended up purchasing a primary residence fairly soon after I graduated college. I think it depends on a number of factors. Do you have credit built up already and means for some form of down payment/closing costs? That’s going to weigh into the original plan. But fairly easy to see where you stand on pre-approval with a few talks with a lender.

On the purchasing power side, you should be able to report the rental income from the 2-3 other units and ideally your base income has increased between now and when you want to purchase the second unit as well as your student loans gone down.

I’d run the numbers on debt service for your property now with current additional debt over current income. And then run additional numbers based on where you expect to be in X years when you want to go after 2nd property. With what’s left of student loans, any new debt, property debt over income sources.

I don't have a lot of experience with DTI ratios but unless your situation changes a lot from now to then it should be forecastable.

Caleb