Hello BP, Newbie from Southern California

[Kelli Ford]

Hello BP,

My name is Kelli Ford. I am new to real estate investing and have always had an interest, but never really went for it, now I am diving in and learning all about REI. I'm a new mommy and I want to create a passive income stream, so that I don't have to go back to work.

I came across BP, by researching how to get started in Real Estate Investing and saw the UBG to REI guide. There's a wealth of information on this site and I enjoy listening to the Podcasts and learning everyday. My goal is to purchase my first Multifamily unit this year and house-hack :)

I'm anxious to get started, but feel like I still need to know more. I kinda feel stuck. I wanted to use a FHA loan or 203k loan for my first investment, but I see that there are a lot of options.

I look forward to interacting with other members and welcome any advice!! :)

[Logan Allec]

@Kelli Ford, 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.

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 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, Kelli!