Owner Occupied Multi family

[Rania Mutumhe]

Hello everyone,

I just got preapproved for a conventional owner occupied multi-family investment property loan and am currently looking for deals. I'm putting my current home up for rental and still need to find a tenant, facebook marketplace has not been very productive as I've been getting more scammers than serious people. Anyways my question is more on how to analyze a deal and decide if its good or not. Initially I thought if the rents cover my mortgage that's a good deal but I'm realizing there is more to it than just that. What are some other things that I should factor in to make sure I don't make too many costly mistakes with my very first investment.

Another thing I watched a youtube video that said to get pre approved by at least 3 lenders to try and get a better rate, is this the recommended thing in the industry?

thank you for all your help as I navigate these unfamiliar but exciting streets of REI

[Andrew Postell]

@Rania Mutumhe Keep in mind that house hacking REDUCES my cost of home ownership. You will NOT cash flow on any property that you purchase. I'm not sure if anybody has said anything different to you but I need this to be your expectation. Remember, you are occupying one of the units...it would be impossible to cashflow in that scenario. Ok, maybe if you rented out each room and maybe did everything Short Term or something like that. But if it's long term renting, then you won't cashflow. But it will still allow you to afford a SIGNIFICANTLY higher price point than if you did not house hack.

So, if real estate appreciates 5% per year, then a $500,000 property will have $138,000 in additional value after 5 years. A $1million home will have $276,000 in value increase after 5 years (using that same 5% appreciation per year). The higher our value, the higher the equity gain is - even if the % of gain is equal between the properties...the dollar amount is higher on the higher valued home because the property is worth more. That's how house hacking helps us gain wealth. We certainly aren't gaining $276,000 with $200 of cashflow. So, don't sweat the "no cashflow" thing. Just focus on purchasing a good home that you feel comfortable with living in. Your commitment is to live in it for 12 months...and then you can do it again and again!

On the same thought, when I buy my primary home it has to fit my PERSONAL needs. Maybe I personally need a good commute time. Maybe I personally need a certain school zone. Maybe there's some other "personal" needs that I have.  I'm addressing a primary home with a different perspective.  It's not JUST about numbers here.  If the numbers work...but I feel unsafe living in that neighborhood...then guess what gets to take priority?  Keep in mind that this is your personal home.  It's not JUST about the numbers.

Hope all of that makes sense.