Quadplex? Apartments? College Rental? HELP!!

[Matt Huss]

Hey All, I am a local Residential Agent here in Tampa, Fl. I have a decent amount of cash saved up ready to be spent on a downpayment for my first investment property.

Problem is, I don't want to take the traditional route of buying a duplex or SFR. Ideally, I would like to start with a quadplex/college rental/apartment building to increase my cash flow from the start.

I'd love your honest input and strategies you've used. Especially surrounding the finance side of everything and the most effective way to do that. 

Any experiences, lessons learned, and honest advice is much appreciated.

Feel free to ask any questions for clarification on my end!

Best,

Matthew Huss

[Luke G.]

@Matt Huss I own a few student rentals and also have had success with a variety of creative financing options including having the seller secure a second mortgage for a portion of the down-payment with a balloon due after 5 years (I've had some banks that will even loan at 80% LTV with a 20% seller's note so I have nothing into it). I generally go in with full-price offers with that financing contingency (negotiable, anywhere from 5-10% seller's note, but you can usually get a much cheaper rate than hard money) with a balloon due at the end of 5 years and have done very well growing my portfolio with this, but you need to have a plan when that balloon is due. You can't just leverage to the gills and expect to refinance when the balloon comes due. Fannie or Freddie won't do these, you'll need a smaller local lender that does commercial loans. All of mine are on a 20 year amort, and anywhere from a 5, 7, or 10 year balloon or ARM.

I generally force appreciation immediately after purchase with a semi-version of the "brrrr" by renovating it right away.  I then either refinance out of the seller's note or just leave it and have a contingency plan to pay the balloon at the end of 5 years.  I've done a few deals where I refi out and don't have any money in (a true brrr), but most of mine I leave anywhere from 5-20k in the deal which is fine with me.

If you haven't purchased anything yet, I'd definitely house-hack a 4-plex with a conventional loan. FHA loan is fine, but there are other first time home buyer options with as little down as 3-5%.