Greenhorn currently in Orlando, FL.

[Theodor Kim]

Hey guys my name is Theo Kim and I'm a first timer looking to invest!

I've been studying different strategies for the past couple years with seminars, books, podcasts, CFRI gatherings, and of course reading BP material and I made it a goal to get out of analysis paralysis and pull the trigger before this year is over.
I am a bit experienced renovating a couple single family homes nonprofessionally, so on the investment side I want to start semi-big keeping myself busy, focusing on multi-family.

I have a measly savings of $40k to play with and I want to start off with a very affordable triplex or quad to rent and hold with light reno. My key area is the Winter Garden-Kissimmee-Davenport triangle in Florida (basically within 30 mins from Walt Disney World) and I also have a special place for the Space Coast, but of course a cashflow property is a cashflow property. My funding strategy is via FHA loan although I'm guessing I can't get a fixer-upper because of the safety regulations of FHA's? (Please share your opinions on this if you have info) I don't own a home so I can make it my primary residence no problem. I was thinking of Airbnb-ing my rooms out if I couldn't legally have full home tenants in my primary residence.
If FHAs does not work, I may try to jump in head first and BRRRR, which is my next goal. This will open other forms of financing like Hard Money loans and partner investors. Again, please if you have experience with this, I am looking for insight on this scenario.

The long term goal:
It may help to know my initial goals which is to get a multi-family rental, let it invest in itself plus the small $1k/mo savings from my 9-5 work, and repeat until I can upgrade. On the side, I am planning on hustling hard and Wholesaling on the side to take over my 9-5 job and then transition that to capital building. In the end, I want to BRRRR hardcore.

So if anyone has any insight on creative finance that you think could work for my strategy (does it seem like I'm doing this right?), multi-family examples that could fit the numbers, and whatever lessons you care to share please do!

Sorry for the long post, but thanks in advance and hope to talk and meet with the BP fans!
-Theo.

[Christopher Sarmiento]

Hey @Theodor Kim!

First off, congrats on your personal journey with REI. I'm semi new to REI investing and started reading and listening to Bigger pockets 2017, didn't pull the trigger until April 2019 to get my first SFH. I'm currently closing on a duplex that I will rehab and get rented out too in Gainesville FL.

Since your goal is to have a multi family, acquiring a triplex or fourplex, an FHA loan with just 3.5% down will help a lot. You can even investigate the 203K loan within it to help with your rehab and wrap it in your loan, if the numbers work for you. Just keep in mind the additional Private mortgage insurance, you'd need to refinance your loan in order to get the PMI out. This is also beneficial if you needed to do some light rehab anyway. You'd get chance at another appraisal and hopefully some loan pay down from your tenants that help reach 20% equity to get that PMI out.

I know some banks, depending on your credit score, will offer their version of the FHA loan requiring 3% down. Might be advantageous for you if you don't want to refinance your loan since there product allows for the PMI to drop once you hit 20% equity. These are great options for someone to get a primary residence loan to afford a multifamily house. Just make sure you crunch the numbers and add all the fees. Remember you must pay fees (closing costs) and some points, depending on your bank, when you refinance. Just keep that I mind. My lender told me to calculate 4-5% of asking price for your home for closing costs.

I would also figure out my target price ranges for these SFHs or MFHs. Then figure out the rent that will come in. Once your have those numbers it should be easier filtering through sites like Zillow. You can also find a property manager and ask them how much they would rent those units for, to get accurate numbers. 

Hopefully this helps! Sometimes you just need to find a decent deal first and work it through before things start clicking. Use it as training wheels that will prepare you for the next one.