How I used a BP Book to close on my fifth property

[Matthew Perry]

For the six months or so I was stuck. I had saved enough for a five percent down payment for many of the properties I looked at, but because I already owned a property with an FHA loan, I needed to save at least fifteen percent to acquire a Multifamily property. I could have bought a house or condo. But I was hesitant because I am nervous about lifestyle creep and an expensive liability if I bought a large house. I also wanted to scale up faster, and buy at least two units.

I reread one of my favorite BP books: Ben Leybovich's House Hacking. In that book Ben talks about how you can buy a house with a guest house on it with a five percent down conventional loan. In it he talks about several House Hacking Strategies. The HOA I'm bought into doesn't allow abnb, but if you do acquire one that does, there could be even more profit and cash flow opportunity. Although also different risks too. So I used that guest house strategy and got preapproved for a house, but limited my search criteria to those that had a guest house, so I could acquire two units.

I found one I liked, and started with a lowball offer of 50k below asking price and closing costs. We settled at 30k below asking price and they paid closing costs. This was at the height of the Covid panic, which helped me because I was able to get at more that ten percent discount on the original asking price. I was able to acquire my fifth property, which will increase my monthly net cash flow by 200 a month.

If you feel stuck, and feel like trying to save for your next property is taking forever, I would recommend reading Ben’s book and utilizing that house/guest house House Hacking strategy.