All Forum Posts by: Account Closed

Hello @Tone Fortune,

In order to use the 203k Loan or any FHA loan, one of the units has to be your primary residence for a year after you purchase the property. After that, you can move out and turn it into a rental unit. I don't have any experience with Section 8, but yes, you should have no issues getting both of the units approved for Section 8 after your renovations are complete. I used the 203k Loan to buy a duplex in West Atlanta. If you're looking for more information about the program, I highly recommend checking out Episode 55 of the "Millennial Real Estate Investor Podcast".

Hello @Daniel Snyder

Yes, there are a lot of cash buyers in the Atlanta market. I ran into the same issue when I was searching for a duplex here. A few tips that I was given and used are:

• Offer the Asking Price - You don't want to give the seller any reason to immediately throw out your offer, especially when you know cash buyers are right there with you. If the asking price works within your goals, then make that your offer and be done with it.
• Offer to Cover All Closing Costs - As @Matthew Nicklin mentioned, sellers are likely to choose the offer that nets them the most money even if it'll take them a couple weeks longer to receive it.
• Send a Pre-Approval Letter With Your Offer - This shows the seller that you are prepared and that the closing won't be held up because something got messed up with your financing.
• Send a Short Letter With Your Offer - This helps your offer stand out and makes it more personal. Explain who you are, what you do, and why you're interested in the house. Some sellers will be more inclined to sell to someone looking for a place to live as opposed to an investor.

It's still worth putting in offers. You will face competition and you will lose out on some properties you may really want. But don't give up, you will eventually get an offer accepted.

Hello @LaJoi Royston,

It's not impossible but I would definitely agree that it's harder to do here. I've been actively following the inventory in a few zip codes (30310, 30311, 30314, and 30318) since July 2019 and have found that the 2-4 unit options are either:

1. Not in the best shape and need work to secure FHA financing or just to make it more desirable for you and your tenants.
2. Already renovated but priced at a point where the estimated rental income won't cover the monthly PITI payment.

If having roommates is not an issue for you, then what @Bryan Henry suggested is the best way to go. Find a nice sized house and your roommates/tenants should cover the monthly payment and maintenance expenses with ease. 

I'm currently househacking a duplex in West Atlanta that was purchased using an FHA 203k loan back in December. It wasn't one of those amazing deals that you usually hear about when people bring up househacking but it met my goal of reducing my "rent" to less than 30% of my net monthly income. My advice to you is to think about what's most important to you. If your goal is to have your tenants completely pay for everything, then stick to that and keep looking. It sounds like you have some flexibility in where you choose to live so I'm sure there are other cities where the numbers will work out better.

@Leeya Kremer yes, as long as at least one unit has been occupied you should be fine.

Hello @Leeya Kremer,

If the property has been vacant longer than a year, then it can no longer be considered a legal non-conforming property. The zoning department will ask you this at some point during your permitting process. I recently ran into this issue but the property I purchased came with a tenant and the previous owner also inherited a tenant. So to the best of my knowledge, the property had not been vacant longer than year. The city did not ask for past leases or anything like that, I just had to submit an affidavit that I signed and got notarized. If the city has proof that the property has been vacant longer than a year, then yes you would have to try and get it rezoned, I can't speak on how successful that process is.

Forgot to mention you both in my replies @Joel German @Danielle Thomas

Thank you. Buckhead and Brookhaven are both great areas that have grown very quickly like you mentioned. Because of this you will probably have a hard time finding something at a price that makes sense from a rental standpoint. To put it bluntly, Atlanta as a whole is overpriced right now. I've seen properties that are completely vacant and uninhabitable as-is sale for $100k+, the speculation is just driving everything up. I completely understand being worried about overpaying due to the hype but no one knows: 1) When the downturn will start and 2) The magnitude of the inevitable downturn. I was reading an article that showed that in certain cities, lower tier property prices actually increased in value due to the demand from people looking to downsize to save money. Personally, I believe that all of the land inside the perimeter will steadily increase over time due to the population growth and all of the active developments in the city. Could be 5 years from now or maybe less, but like I said, no one knows, you just have to buy when it makes sense in your case. For me, my main goals were to be close to my job (5 miles away max) and to reduce my "rent" to 30% of my net monthly income, the property I chose met both of those goals. Because this is my first rental property, I was not pressed to land a "home run deal" the first go around. If I break-even at the end of every month after the mortgage and expenses are paid, I'm completely ok with that. If I make $10 profit at the end of every month, even better. If I make $100 profit at the end of every month, great! I say all that to say, figure out what's most important to you and stick with that. Definitely feel free to reach out if have any other questions.

Thanks. Just keep educating yourself on buying your first property. The guides from BiggerPockets were a great resource, BP Guides. I would start with "The Ultimate Beginner's Guide to Home Loans", "The Ultimate Beginner's Guide to Real Estate Investing", and "How to Buy a Duplex: The Ultimate Step by Step Guide". The BiggerPockets blog also has several articles about getting started with rental properties. Just do a keyword search for anything you're curious about and you should be able to find something relevant. Outside of BiggerPockets, I highly recommend podcasts. "Millennial Real Estate Investor" is a great one to start with, MREI Podcast. On Episode 43, they did a full breakdown on different loans that are available, how to get pre-qualified, etc. If you want more information about the 203k Loan, listen to Episode 55. Because you're new to the city, I would also get out and drive around potential areas of interest to get more familiar with the city. If you want agent or lender recommendations, I can help with that as well.

@Danielle Thomas When it comes to the lowest down payment possible on 2 to 4 unit properties, you can't beat the FHA loan. It will always be 3.5% down up to a 4-unit property. A close second is the HomePossible loan from Freddie Mac which requires a 5% down payment on up to a 4-unit property. However, as of a few months ago, if you make more than 80% of the "area median income" you will not able to use the HomePossible loan. If you stick with a 1-unit (SFR) property though you should able to use the Conventional 97 loan from Fannie Mae which only requires 3% down.

@Joel German I would definitely get pre-approved as @Sher J. recommended before making any offers. It would suck to make an offer and then not actually be able to secure the funding. Pre-approvals are good for 90 days so I would start the search maybe 4 months out from when your lease ends. That will give you time to actually shop around for lenders and find a house you like. As far as how much to save up, it really just depends on what area you're looking to buy in which will affect your overall budget. $10k is definitely a good starting point but you can never have too much set aside so I would just keep putting money away until you actually start making offers. I would also make sure you still have a comfortable emergency fund set aside after buying the house so that you can cover anything that may come up.

I closed on a duplex in West Atlanta using a 203k loan today, I ended up needing about $16k to cover the down payment and other closing costs. This loan is more expensive to do because it's a bigger risk to the lender so if you're not doing a rehab loan, you probably won't need as much at closing as I did unless you're looking at much more expensive properties. I've done a lot of research on the different low down payment options over the past few months so feel free to ask me any other questions you may have.

@Jingru Sui Not that far West. Looking for something still within I-285 like I showed in the map I posted. I'm guessing you haven't seen many, if any, properties in that area sell for around $100k?