New Member from Cali

[Elizabeth Garcia]

Hello Bigger Pockets family!

I am a new investor looking to build long lasting wealth for my future! I graduated from California State University, Fullerton about a year and a half ago and am currently working as a Sales Analyst for a fashion e-commerce retailer. Although this is a great opportunity fresh out of college, I quickly learned that working for someone else does not allow my time to be truly mine. My goal is to take back my time, and I strongly feel real estate can help me get there.

I'm looking into multi-family (2-4 units) real estate where I can 'hack' for some time then hold and continue building my portfolio. I live in Southern California, which I know isn't the best market for investors, but I'm hoping to find some great deals. I would appreciate any tips or would love to meet up with any local investors to gain more insight and knowledge!

[Logan Allec]

@Elizabeth Garcia, you're smart to be thinking about getting into a multi-family property using FHA financing with little money down. In my opinion, that is the best option for a young person looking to get started investing in real estate. I recently did it in the LA area, and you can too if you're vigilant.

One thing to keep in mind when looking for an FHA owner-occupied triplex or fourplex is that 85% of the market rents on all the units need to cover your monthly payment (principal, interest, taxes, insurance, and mortgage insurance). This is known as the self-sufficiency rule. It only applies to 3- and 4-unit properties (not SFRs or duplex) bought using FHA financing. I put together a spreadsheet here to help potential house hackers quickly analyze whether or not a property qualifies. There are other FHA requirements concerning which you should contact your local lender, but determining whether or not a triplex or fourplex meets the self-sufficiency rule is a good place to start as this rule will immediately eliminate many properties from your search, especially in expensive markets like ours.

I wish you the best and happy New Year, Elizabeth!