All Forum Posts by: Alexander Kostrubiec

@Kim Meredith Hampton Probably gonna go for a 4flat. I'm 22 and my girlfriend are moving out of our parents' places soon. The entire plan is to have an FHA loan to get 3.5% down on the unit, live in it for a year, then legally convert it to an investment property and move to get a quick easy investment property.

It makes sense that a duplex wouldn't be worth their time. I have no qualms against paying for my unit, as long as I'm still net positive cash flow.

Hello.

I'm a Loan Officer and soon to be real estate agent, so I'm pretty handy with understanding the laws and nuances of these topics.

I've been wondering... If you live in a multi-unit property and rent out the other unit(s) which cover your PITI in full (with some net cash flow), you essentially do not need to pay rent, am I correct?

So, in the instance of hiring a property management firm to take care of retaining tenancy, repairs, etc... Is the 6% - 12% property management fee applied to your occupancy, even though you aren't paying rent? I am aware that the property management fee is 6% - 12% of the gross rent. Well, you're technically not having to pay any rent at all. So, are you going to get charged? Will your unit not receive any support in the event of damages, etc?

Thank you if you took the time to read my post, and hopefully this post will pique your interest, especially those of you who are into house hacking!

Again, thank you so much. As a young person/21 years old who really doesn't have that much experience in these matters, I feel that the best I could offer at this point would be my services as an MLO, or any capital for other investment ventures. I feel like I should gain a little more experience before I even attempt to do such a thing.

Because of my parents I have sort of an established relationship with some pretty successful people. A president of a brokerage firm, the former vice president of a brokerage firm, and a lot of agents/loan officers. I guess it's time to start reaching out lol.

 That's some really great advice, thank you so much. I know a couple of people who would most likely consider doing investor financing (Maybe not 100% investor financing) with me, people who would respect me based on what I have achieved so far in the field. 

If you would answer this question, is the best way to build relationships with locals through investor/real estate meetups in your city? I'd love to go at some point.

 
I've picked up The Book on Investing in Real Estate with No (and Low) Money Down, a couple of chapters in, great material. Thanks for the other book recommendation, I'll have to read that one as well.

I'm aware that there are many options in terms of investor financing. From what I've studied, I see that 2+ investors are more common. This post is however regarding a single investor financing a fix and flip.

I'm not particularly looking for 100% financing, I'm just asking questions regarding the investor financing process. The 100% investor financing seems the most simple to me because the profits between you and the investor are split 50/50. Though, it is true that there would probably have to be a prior established relationship between you and the investor for such a large amount of capital.

Hello everyone.

Throughout my studies I've discovered that it is possible to perform a fix and flip with no money on your part, as long as you do the work. What this apparently requires is for an individual to approach an investor that is willing to finance the costs, all the way up to 100% of the cost.

I assume that you could find people willing to invest with you through this community, or local Real Estate investment groups. I find this extremely surprising that an investor would be willing to contribute all the way up to 100% of the financing.

Anyone with any experience in these matters? Thank you :)

 I apologize if my questions seem difficult to follow, I'll respond to your questions in bulletpoint format to make it easier for anyone to follow.

• Where would the GF live?
  With me, in my owner-occ unit within my 4flat. My unit would not be designated as her principal address.
• Where would you live?
  In my owner-occ unit in my 4flat, which would be my principal address.
• Which units and/or rooms would you rent for AirBnB?
  We would AirBnB rent the owner-occ unit in my girlfriends 4flat, which is her designated principal address.
  
• I thought you were going to have a unit you'd use as AirBnB and then go live with your GF in her unit.
  The plan is that my gf and I are both going to take out FHA loans for the low 3.5% minimum downpayment on 4flats. My girlfriend will be living with me in my unit in my 4flat, but her designated unit in her 4flat would essentially be useless to her in terms of residency, since she is already living with me. There is no reason for us to be living apart, so the unit that belongs to her within her building would be essentially useless.
  
  
• But, your last post talked about your GF not living in her unit.
  My gf would not be living in her owner occ unit per se. She would not have tenants within this unit, it is her designated unit.
  
• So, are you saying that both of you would be buying owner occupied units and neither of you would live in either of them?
  We would both be purchasing separate owner-occ 4flats with FHA 3.5% minimum down. She would live with me in actuality in my owner-occ unit, but the owner-occ unit in her 4flat would be her principal address. We already live together.
  
  The reasoning for purchasing separate units in this manner is that an FHA 3.5% down on a unit uses a lot less capital than 20%+ down on a conventional mortgage on an investment property. We want to start investing as soon as possible, and this seemed like an interesting route.

 
I understand completely that misrepresenting a non-owner occ property as owner-occ is fraud for property and that mortgage fraud is severely punishable. I don't know what lenders would do to test for occupancy, ring your doorbell? I'd never want to cross any legal boundaries.

I'm not certain as to what the exact legal definition of occupancy is in terms of tenancy, but from my point of view, an occupancy would be something that included a leasing contract, payment of utilities, delivery of mail, tenant implements their own furnishings, etc. What if you took a week long vacation every month as the owner-occ, you know? It's quite murky.

The reasoning that the airbnb idea seems murky to me is that my girlfriend would be paying for utilities on her unit, she'd receive her mail at her unit, she'd furnish her own unit, legally it'd be her primary residency. If you airbnb'd your unit for a week to someone for 500$ for example there's no revolving lease contract or anything, that doesn't seem like occupancy to me, it seems like a smart move.

I'll definitely research a lot more into FHA's stance on occupancy, especially that 1 year occupancy piece of info that I see everybody mentioning around.

I should clarify the situation that I have in mind. I have a girlfriend of 7 years. While we're not married yet, though we plan on marriage. Our goal is to take advantage of our current standing as separate individuals not legally bound to one another and put FHA 3.5% minimum down-payments on an owner-occ 4flat with title held by myself, and a separate owner-occ 4flat with title held by her, so that we can have a start on investing in properties with less overall capital, rather than buying a single FHA 3.5% 4flat and then having to come up with enough capital for a 20%+ downpayment on an investment property. 3.5% of $300,000 is a down payment of $10,500 which is a lot less than 25% of $300,000 for example, which would be a $75,000 down payment.

We would be living together in one of the 4flats. One of the flats would be denoted as her primary residency for all intensive legal purposes, but she wouldn't truly be setting up camp in there. Thusly so, that would mean that in one of the 4flats, the intended owner-occ unit would be essentially useless to us for occupancy purposes. The tenancy/rent would obviously pay off the PITI, and that leaves us with an empty unit that cannot be designated as the legal residency of another persons.

We could use it as a storage area or something like that, but I was thinking if there was anything that can be done within legal limits with an owner-occ unit, such as airbnb, since in airbnb people will "rent" out their primary residencies.