Hungry Newbie, help me get started

[Maurice Colbert]

BP hello, I have been dreaming real estate for the last few nights. Quick back story I have always wanted to own property, my uncle owns a lot of homes and I really admired him. Back when I was in my 20s I bought the Carlton Sheets penny on the dollars information. I wasn't credit ready, nor was I motivated it went to waste. So fast forward to my 30th birthday in 2013 I was getting ready to try and buy my first unit in a apartment complex, the seller wanted to sell 2 units under 120k. I couldn't get it because the complex wasn't FHA approved. To this day I am kicking myself to not try to get it approved or try other options, so I purchased my own home to live in, now I want to get me something similar to what I seen in that apartment complex. I recently attend the Rich Dad education seminar, they wanted to sell the 3 day class but I want going to pay for it because of mix feelings on the information. Now I am hungry I want it, I have seen information that they have showed me at the seminar and just reading here. My question is what's the first real step to get started, I just need to flip a few homes, and I want to hold some units. Help me get started BP- Hungry Newbie-Maurice

[Logan Allec]

@Maurice Colbert, in my opinion, house hacking a 3- or 4-unit property using FHA 3.5%-down financing is in my opinion the best option for a young person looking to get started investing in real estate. It frees up so much cash (if you have it) to invest elsewhere.

One thing to keep in mind when looking for an FHA owner-occupied triplex or fourplex is that 85% (75% in certain states) 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.

Good luck and reach out to me with any questions!