Portland House Hacking on Steroids!

[Ian Crist]

Hello Everyone,

I wanted to share a great financing strategy I have came across that has been able to open lots of doors for investors like myself as well as investors I work with who want to hold a cash flowing multifamily property but don't think they they have the funds necessary for the down. Please do note that this is for an investor looking to "house hack" since it is an FHA program you do technically have to live at the residence for a year, and are able to have only one FHA loan at a time.

Take a minute to read the scenario I put together below and let me know what your thoughts are! 

  (**I am not a lender pitching this product or work for any sort of lending institution) 

   Scenario:

We have a buyer, Snookie.

Snookie has a dream to buy a 4-plex but doesn’t think she will      qualify based on her scenario, income, assets.

The Duplex she is buying is listed at $700,000.

•Snookiemakes $60,000 per year / $5,000 mo. and has a 660 credit score, not perfect but not bad.

•Snookie has roughly $35,000 saved to buy a home, which she thinks is not even close to what      she’ll need….

•Bank allows Snookie to spend up to 50% of her income each month or $5,000 / 2 = $2,500

The duplex Snookie is going to buy is going to be income generating so the back will give her credit for that. What happens is they order an appraiser to come up with a fair market rent for each unit that is going to be rented – that’s called a rent schedule, you can also go to craigslist or your Realtor to try and get a ballpark.

Example: $700,000 = 3.5% down payment $26,250.00 

Mortgage payment is as follows:

•$3,708.80 – mortgage

•$500.00 – property taxes

•$100.00 – home owners insurance

•$480.96 – mortgage insurance (less than 20% down and FHA)

$4,789.76 – TOTAL MONTHLY PAYMENT - We all know Snookie can only spend up to $2,500 per month soo…… let’s make it happen, why not!

Snookieis projected to make $2,050 for each of the 3 units for a total of $6,150 per month with a 25% vacancy rate that’s $4,612.50. I then add that to her income, say wha?! Yep, so now Snookie makes $5,000 + $4,612.50 = $9,612.50 per month / 2 = $4,806.25 per month. She now qualifies for this home!

Oh wait, don’t we need reserves, NOPE. Write it up!