Creative finanicing for small multi family

[Stephen Gibson Jr]

Hey there, I'm interested in getting into the small multi family space in my area. My issue is I can't afford properties of interest in desirable enough areas that I'm willing to use a primary residence. So I'm contemplating potential partnership possibilities. My initial idea is to find another individual like me (young professional w/ decent income and enough half the downpayment) and purchase a 4 unit in prime/great location. Are people doing this/is it a feasible idea? 

Are there other options for somebody in my situation to procure funding ? I'm planning to be living in a unit, would there be an opportunity me to also partner with an investor in other ways? Would it even be beneficial ? I'm just trying to learn and think it through. 

Thanks for reading, any suggestions would be greatly appreciated. 

[Jacob St. Martin]

Hello Stephen, I have a couple of thoughts:

- First, there is a huge change with FHA loans that is about to roll out. Previously, the 3.5 or 5% down option was only for single family houses and duplexes, triplexes, and quadplexes were 15-25% down. However, they are about to change this so that all of these can be obtained at 5% down with an FHA so long as you meet the FHA requirements.

- I would encourage you that if it is an asset that is not desirable enough for you to live in than it is probably not an asset you want to own. Other people most likely feel the same way you do which impacts both rent and appreciation. 

- I absolutely love partnering with people on house hack deals. I have done it twice and both have been great. There are a lot of ways that you can do this but what it comes down to is figuring out what you need from them, what they need from you and quantifying that balance in the split of equity, cash flow, and responsibilities. It sounds like your ideal partner has a high income and some cash but little time. If you are the person managing, bring half of the down payment, and some of the W-2 income than you should definitely get more than 50% of the equity and cash flow. What you want to do is find a scenario in which every party involved wins. 

- If you find something that needs a lot of work you could try to BRRRR which may solve your financial barriers without the need for a partner but you will probably run into issues with your income on the refi end anyway.