All Forum Posts by: Anthony Craiu

@Account Closed) going through my list of lenders, which I generated from the FHA approved lender list, and getting their policy practice in writing so that I can compare lenders from a high level perspective and not have 20+ institutions pulling my credit. Once I have it narrowed down to 5 or less lenders, I'll get official letters of pre-approval. I can then use these letters to know whether a property is within my current means or not. That'll start my intensive house hunting phase and I'm going to need all the help I can get once I'm there.
Do you think this approach that I am taking is the right way to do things? If not, why?

Thank you for your time.

Craiu

Thank you to all for the replies.

@Brent Coombs, thank you for the clarification. I'm glad that what I am doing has been done before by people here on BP.

You are correct on the unit number. From my research, the FHA does not insure loans for properties with 5 or greater units because that falls into the realm of commercial property. While I haven't run all the numbers, I feel as though getting a 4 unit property is better than a triplex or duplex because the lost income from the unit I live in will have the least impact on the cashflow. I think it would be much harder to get a positive cashflow with a duplex compared to a quad. Nevertheless, the numbers are all that matter in the end, so if a duplex turns out to be a better deal than it is what it is.

Thank you. That is a piece of advice that I needed. I had no idea I could ask lenders to give me up front policy practices. This not only gives me a baseline to compare lenders, but also has no impact on my credit. Thanks again.

@Don Young Hi Don! Thanks for the welcome. I'll check out those podcasts like you said, hearing experiences from others in my situation will be invaluable. Thanks!

@Jerry Padilla I'm glad I'm heading in the right direction. The lenders that I've spoken to have all tried to get me to find a property first before I get information from them, I'm not sure why. It just makes simple sense to know my budget before I go shopping. How would I go about finding an experienced investor friendly loan officer in my area? I've heard to ask around on BP but I'd like to have other avenues of research as well. Thanks.

@Jesse Peña Wow. Thank you so much for all this material. Not only is it relevant to my situation, but it also includes reading material that will grow my knowledge base. BP is truly a great place. Thank you so much.

@Account Closed Thanks Melissa! I look forward to being a part of this community.

Thank you again to everyone!

Craiu

@Account Closed

Thank you for the response. I'm going to have to do some research on house hacking because I'm not entirely sure I know what that term implies. I have a few specific questions about financing with an FHA loan if you're up to it:

Banker's tell me that shopping for a loan and getting hard credit inquiries hurts my credit score, but the research I've done online shows that all hard inquiries within like 30 days for the same purpose (i.e. a home loan) count together as one hard inquiry. Do you have any knowledge/experience on this subject? I'm getting a lot of conflicting information.

I'm looking to get letters of pre-approval before I look at properties. The idea is to be able to more accurately calculate the cash flow from the property. Is this the right approach? Some sources advise to find the property first and then work out the financing, but I feel that I won't be able to get an accurate idea of the cash flow from the property if I don't know what my mortgage payment is going to be. Using general expense rules doesn't sound like the right way to approach this, but I could be wrong. Your opinion would be greatly appreciated.

Thanks again!

Craiu

Mr. Coombs,

Thank you very much for the reply. Given my circumstances, I feel that paying this low down payment will give me: Independence (still live at home with restrictive parents), experience in the buying process for real estate (with intent to buy and hold), experience in being a land lord, and free rent. If you feel that there is a better way for me to gain those things or more with my current circumstances, I'm willing to hear you out and change/alter the path to my goals.

I'm new to this and have read/heard that the cash flow generated relative to the value of the property is the number one statistic to look at. I feel that the cash flow relative to the investment is more important in my circumstances. If I understand you correctly I believe we are in agreement. In terms of rehabbing/enlarging, I don't have the experience or prior exposure and feel that at this time it will compound my potential to take a bad deal. I don't know enough about enough to feel confident about a buy/repair/hold deal. While it could potentially yield a greater reward, I feel the additional risk of loss is too great given my current knowledge/skill set.

I already have an emergency fund set up and I am willing to spend 15k on everything in total. I don't think I even qualify for a 3.5% down payment that large so the remainder could potentially be used to find a better deal, be it through coaching, real estate agents, fees, etc.

Cash flow against investment is my only numerical concern so any expenses that could potentially increase my return rate will certainly be considered.

Thank you for welcoming me to the community.

....

Anyone else have something to say that is actually relevant to my post?

Not to sound overly unappreciative but this Mark Nolan guy seems to not have actually addressed anything I wrote. I'll keep my fingers crossed.

Ok, I didn't know this automatically made a post. Here is my quick and dirty set of circumstances and what I am doing to achieve my goals. If anyone reads this and has two cents I would greatly appreciate it. Even a "looks fine" or "go back to the drawing board, kiddo" is something I can work with and appreciate. Here it goes:

I live in Akron, OH and am looking to move out of my parents house and buy a multi-family property. I have roughly 15k available to spend and make 60k a year before taxes. My intent is to buy a multi-family property and live in one of the units. My criteria involves getting a positive cash flow, even just zero cash flow. That will include all the expenses of the property and I would essentially be living a the property for the cost of managing the other units. This will give me a financial edge in saving for my next property and give me valuable experience as a land lord. I have good credit (750+) and as far as I know the rest of the requirements to qualify for an FHA loan. I believe that an FHA is in my best interest because I can have a lower down payment.

Here is the "novel" part of my plan. I do not see a need to evaluate the capitalization rate of the property (The cash flow against the full value of the property). I do see value in evaluating my ROI however, the cash flow I generate relative to my down payment. This is why FHA seems more appealing, since a 6X decrease in the down payment has about a 2X increase in mortgage costs. This will (i think) help me achieve a better cash flow. I don't want to ramble on too much, this is already quite long, but if anyone with experience (or even just fresh eyes) can punch holes in my plan I would greatly appreciate it.

Thank you in advance,

The knowledge hungry investor

I am looking to kick off my real estate journey soon and I need all the help and support I can get! I hope to connect with experienced people who can help me avoid the pitfalls that new investors might run into. I am already charting forward towards realizing my goals and I have joined the biggerpockets to glean from the experts and one day give back to the community.