All Forum Posts by: David Da Silva

Im assuming the property you bought is being financed?

If so everything should be included in the bill (except the water and sewer). You can usually have the mortgage auto withdraw from an account. I have the monthly amount auto withdraw from mine and it's the same account where my tenants direct deposit as well. Makes the whole process a no hassle deal.

I do this from time to time with my buyers. 

Typically, you can borrow up to 50% of your 401k. Get a deal that cashflows well and have the property pay you back the loan. You can get your first investment property for free if you do it right. It's a no brainer in my opinion.

0% down? That's a loaded question lol, plenty of ways to do it though.

USDA and VS are 0% style loans (but you pay closing costs).

But If you're creative with the finances, you can technically make any deal 0% down.

Here's a perfect example of one deal I just closed with one of my clients a couple weeks ago:

Style: Triplex - (Found this one off market for my client, which works best because we have more negotiation power vs a market listing with multiple bids)

Price: $389,000          Taxes: $11,950          

Interest Rate: 2.5% Loan Type: FHA

PMI: $320 per mo Insurance: $100 per mo

Total monthly mortgage cost: $2900 per mo

it was a 3x 3 bed 2 bath, so each respective rent was $1500 per mo (extremely undervalued rent for the area btw, we're gonna increase it to $2200 when renovated).

So mortgage = $2900 - Rent of $3000 = -$100 (or $100 per mo rent cashflow).

My client was basically getting paid $100 Per mo to live in the 3rd unit.

Now the best part, the downpayment and closing costs: $25,000

How did we do this? I had my client take out a loan on her 401k, then had the seller offer a $25k credit at closing so my buyer could pay back her 401k Loan.

So basically, 0% down, 0% mortgage payment, and when she's ready to move out she'll be looking at an easy $1600-$3700 per mo in cashflow.

This is one of my favorite strategies to employ.

Hope this helps.

Exactly, Bill nailed it.. 

If you buy in an area that sees growth and movement, chances are that it will appreciate more or less sooner than later. My market has appreciated as much as 10% per year, and homes aren't cheap here to begin with, we're talking easy 40k+ per year appraised value on homes valued at $500k. Put it this way, the population continues to grow, but the land stays the same. 

Buy and hold is a long term gain, your only real concern should be cash flow. Appreciation is just the cherry on the ice cream.

Are you looking to buy and hold or flip?

Flips definitely limit your ability with profit if the market is expensive. 

If you buy and hold, the focus is primarily on cash flow. Prices are up, but rates are at a record low. High interest compounds much more than a high principal so the monthly is still lower with a lower rate. 

Also knowing what your target price is helps big time. I noticed that multi-families in my area that costed 400-500k in 2016 and are now in the 500-600k range. With that said the 600-700k range is more expensive, but it hasn't increased as much in value even though the rents overall have increased dramatically for those types of properties ($6k+ for a 3 bed 2 bath unit x 2 Units). This means that although more expensive, there's significantly less competition for higher priced properties but the cashflow potential is higher as well.

It all comes down to the #s. I'd rather buy high and make a lot on cash flow than to sit idly trying to time the market.

Hope this helps

Conventional = definitely no. 

If you found a great deal then I would suggest looking into a no doc loan, but keep in mind you'll pay a significantly higher interest rate and probably a couple points on top.

Best of luck

You certainly can get 2-4 unit homes with an FHA loan, I do this with my buyers all day.

I would suggest trying another lender. Also 3-4 unit homes have to meet a self sufficiency criteria, which means that the property has to pay for itself. This means that the maximum monthly mortgage payment is limited to 75% of the total rental income. 

3 units are tricky to buy because of this, although I have finagled the #s on many of these to work as well. 4 units usually have little issue since its +1 door. Just some food for thought..

Pros and cons to both sides of the argument. 

As an investor you have to ask yourself: Is your goal to save money, or make money?

Is the 2.5%, 3% or even 6% worth it when there's skilled agents that might be able to save you 10-20% on your deal?

If you plan to do it for a living, then I'd say go for it, but if the goal is just to save money, I'd think about it before jumping in because a great agent will pay for him/herself.

I'm an agent not because I want to save money but because I have a passion for helping newer investors make successful deals. I also have access to the best lenders and attorneys in my areas. A great agent is a package deal, more to it than just a commission, they give you access to invaluable deals as well as connections.

Hello Suresh

I buy/sell in Newark and the Oranges heavily for my clients and I. I understand the market and comps well here. Just closed on a 3 Fam in East Orange 2 weeks ago.

If you have any questions, feel free to reach out to me.

Before doing anything, ask yourself what is my goal?

Why 2 units vs 4 etc. I ask this because a 2 unit might make more income than a 4 unit if it's in a less demanding area or is in lesser condition. To figure this out, begin researching the numbers in your area (rents, comps on properties, taxes etc..)

Get all the numbers down, figure out your budget by & get pre-approved, then focus on an area you want to venture.

A good realtor can help you with all of this, and an even better one will find you great deals.