Aspiring Miami Investor

[Nathan Guanch]

Hi BiggerPockets,

My name is Nathan, I live in the Kendale Lakes area of South Florida, I've recently turned 25, and just crave achieving financial independence. I've been working a full time job handling worker's compensation for a little over 2 years, and have been able to save the majority of my earnings due to living at home. I don't make spectacular amounts of money, but the fact that my cost of living is so low certainly helps. So I figured, instead of just rushing to move out, why not start accumulating some wealth building assets? I've always been somewhat interested in real estate, but I also always had the perspective of requiring a ton of money before starting, and that mindset has certainly changed.

My current plan is to acquire at least one property per year, beginning this year, with the intent being to be a buy and hold investor. I know I want to focus on single family homes, primarily because it seems they're easier to sell. I don't particularly mind the idea of buying fixer-uppers and also intend on doing the property management myself. Because of this, I am restricting my search for the first property to under a two hour drive.

Honestly I'm not huge on discussion forums in general, but feel its about time I make the exception. I have done a fair bit of self educating, and feel I am quickly approaching that plateau where I won't learn much more until I actually go out and do it, not to mention the knowledge will be worthless if not utilized.

So with that, I'm glad to finally introduce myself, and look forward to meeting some great people. 

-Nathan

[Thomas Franklin]

Nathan Guanch I am not a fan of purchasing a Residential Multifamily Property known as "House Hacking." If you are looking to owner occupy, you may want to consider starting out, with buying a Duplex, TriPlex, or a Four Plex. Many Realtors will suggest purchasing a property using a FHA Loan, to reduce your out of pocket money. If the property requires rehab, the Realtor and/ or Mortgage Broker will suggest applying, for a FHA 203k Loan. A FHA 203k Loan is where the purchase price and rehab costs are rolled into a single loan.

Assuming you have a respectable FICO you can buy, with a FHA Loan (3-5% down, a 30 year amortization schedule, and a residential loan rate). You live in one unit and let your tenants pay the mortgage and other property expenses. This will give you experience as both a Landlord and Property Manager. The downside is you will need to live there, for a minimum of one year (to satisfy FHA Requirements); AND because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC. What happens if one of your tenants has a slip and fall, on your property, or something else happens to them? You are on the hook and can be personally sued, for everything you own. Some people will say, "Take out a quality Insurance Policy and you will be protected." Ambulance chasing attorneys know their way around and can legally navigate around Insurance Policies. Another downside is you loose on the advantages, of the Federal Tax Code, by not closing in the name of a LLC.

If you want to close in the name of a LLC, Mortgage Lenders will offer you Commercial Loan Terms (25-30% down, a 15-25 year amortization, and a ballon due in 5-7 years). This is what I am encountering, in the current Mortgage Industry.

If you think you will go FHA, Conventional, FHA 203k, etc. and then Quit Claim the property, to a LLC, or a Land Trust you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days. These clauses are contained, in all Promissory Notes nowadays.

Many Realtors and/ or Mortgage Brokers will not tell you this information. Many, but not ALL are only focused on the commissions he/ she will earn and not focused, on your best interests. You may be asking yourself what can I do? Locate a Motivated Seller that will consider Seller Financing. You may have to put more money down (10-15%), but you can close, in a LLC, with no worries about banks. I have a lengthy Legal Opinion, from my seasoned Legal Team regarding this matter.