Investing in multifamily deals as a new investor in Dallas

[Demarcus Owens]

Hello I am a new real estate investor looking to get started in the Investing world. I have watched and listened to a few podcasts on house hacking and getting an FHA loan for a multifamily unit ( tri plex or four plex) and renting out the remaining units. Has anyone in the Dallas area done this and if so would you be willing to share some insight into getting started with this strategy? If I can be of any service as well to any seasoned investors I would be more than happy to connect on that front. Thanks for any advice. This is an awesome platform to be apart of!!!!

[Arissa Pedroza]

I live in San Antonio but have done this before. You just need to get in touch with a lender that will lend an FHA loan on a 4 plex. Some DO count the income from the other units in order to assist you to qualify. You will need an agent to find the property for you and many of the good agents can also refer you to a lender that will lend an FHA - most do.

[Joe Hughis]

Hello @Demarcus Owens.  Welcome to BP and the world of investment real estate.  :)  The best advice I can give you is to study up as much as you can about different ownership scenarios and possible even get to know another 1-4 unit property owner and talk to them about their experiences.. When you find a good property that minimizes your risks and provides you with the benefits you seek, take the dive.  Dallas is a very stable market right now and I'm sure you will do well.  Cheers!  

[Demarcus Owens]

Thanks for the feedback. I will definitely do some more research and due diligence. I am assuming that a usda loan would also be the same situation correct? I saw that they do no deposits for new home owners.

[Milton Granados]

@Demarcus Owens Welcome to BP! I just closed on a fourplex with an FHA loan here in Irving about a month ago, still learning as I go. A lot of properties here in the Dallas area might be a little overpriced but you have to keep running your analyses and keep your eyes open until you can find a property to add value in some way.

[Demarcus Owens]

@Milton Granados Thanks and that is awesome to hear. I will keep that in mind in my search. Since we are close in the same area. If I can be of assistance to you in anyway feel free to reach out. I am always seeking to learn and grow from investors such as yourself. All the best!

[Eric James]

A related option you can keep in mind is getting an FHA 203k renovation loan. One nice thing about these is you get confirmation on your cost and ARV numbers from an FHA consultant, as well as the lender's appraisal. There a things to learn about the process, but it isn't that complicated.

[Demarcus Owens]

Thanks for the tip @Eric James. I will look into that.

[Edwin Borrero]

Welcome! Fellow Dallas noob here myself. I'm in the exact same boat as you - trying to house hack my way into REI. Hopefully we'll cross paths someday!

[John Larson]

This is a great move if you can find something in an area you are willing to live in. I have found the "good deals" that actually cash flow in the DFW area to be located in neighborhoods I wouldn't want to live in.

My issue with multi family investments is the exit strategy. Problem with multifamily is if you ever need/want to sell the property one day, the only person/group that will be willing to buy it from you is a cap rate buyer/investor.

Single family has always been attractive to me because it is easier to manage and your pool of buyers is much larger if you ever have to sell. If you purchase your investments in good areas you can always easily sell on the retail market to a buyer who is willing to pay market value, not based on cap rate. Just food for thought from a guy who has done a lot of deals. I like the play to take advantage of the FHA loan with a low downpayment but you will only be able to resell this property based on the income it generates. Just keep that in mind.

[Immanuel Sibero]

@Demarcus Owens

I think you're on the right track. House hacking with an FHA loan is definitely a sound entry point into REI. As mentioned by another poster, the 203k option is worth looking at as it can be a way to add value. Beware of other requirements related to FHA loan such as PMI insurance and owner occupancy of the property.

Also, another point regarding a comment on cap rate buyers. Single family houses up to 4-plexes are generally priced using sales comps, not cap rate comps. So there should not be a concern that you would have to deal with cap rate buyers when you try to sell a duplex, triplex or fourplex.

Cheers.... Immanuel

[Demarcus Owens]

Thanks and look forward to connecting as well. Let's set a time to meet sometime.

Originally posted by @Edwin Borrero:

Welcome! Fellow Dallas noob here myself. I'm in the exact same boat as you - trying to house hack my way into REI. Hopefully we'll cross paths someday!

[Demarcus Owens]

@John Larson

Thanks for the tip I will keep that in mind in my search. Really appreciate the feedback it's very encouraging! 

[Demarcus Owens]

@Immanuel Sibero

Thank you for the advice on that. I have heard a lot of talk from other investors and Brandon talk about utilizing the FHA LOANS. I'll keep in mind of the warnings as well.