All Forum Posts by: Matthew Brill

You can go with the FHA and have the extra cash from the difference in down payments. You can also check some local credit unions/banks and see if they have any loans that include rehab costs.

How did you 1031 it if it was your primary residence? Only roll over gains from non-occupied units?

It can be potentially a good deal still. It will depend on the property/market/neighborhood. If you are house hacking and saving living expenses I would be less apprehensive. You can always just live in it and save the expenses until rents appreciate enough. Also having strong cash reserves can ease the burden of negative cash flow certain months if you are trying to ride some appreciation. I bought a triplex house hack in 2017 that saved me expenses for 2 years until I moved out. Once I did move it has been net negative cash flow over the next 2 years. But I did get some principle pay down, and I bought in a good location and the property has appreciated $250k over 4 years. Just realize that that mostly all luck.

There are two costs you have to account for with FHA. There is the upfront mortgage insurance premium due at closing and the monthly mortgage insurance premium. This changes based on LTV and the loan amount.

https://www.fha.com/fha_requir...

While it is possible to buy a property with little or no money down, the risk will be in not have reserves should something come up. So you are either looking at finding a partner with money and ability to get a loan, or saving up money.

Real estate is great. But the first thing would be to think about what you see yourself doing in 10, 15, 20 years and then working towards that. What do you want your career to be in? That is where you will get a lot of fulfillment in life. And don't be hesitant to take out debt for school. You just have to be smart about it and make sure you are pursuing something that you will enjoy and will be able compensate you to cover your debt. I came out of school with $250k+ in loans but have a job that I can easily pay it back how I want and still have a lifestyle. Having $100k in debt and then getting a job where you can make $75k isn't a bad trade off.

If you think that you can live in the place and save expenses compared to renting something equivalent then it could be worth it. You say the rent is $1700 per unit. Your PITI will be $2655 according to your analysis. That means your net effective living expenses will be $955. That doesn't include any maintenance, CAPEX, vacancy, or property management but that's not bad at all. Just make sure you can support the full mortgage payment even if you are vacant should it come to that.

@Andy X.

That is really a personal decision. Personally, I am early in my investing career with a strong income from my profession. I'm much less concerned with making $100-200 monthly per door and more interested and willing to be aggressive in creating wealth. So I am more comfortable with taking the lower cash flow, higher upside properties. But I do have some properties that are more cash flow oriented to balance out the portfolio. For example I have a duplex and a SFH that will not see much appreciation but they make $700-$1000/month in cashflow. And I have some other properties that will appreciate more and make less than $100/month cashflow. So if they have higher expense months the cash flow properties provide an extra cushion. It comes down to what are you investing for and what best helps you reach your goals.

For me the cash flow is a little weak unless you think it will appreciate significantly. Don't forget to include management fees, even if you are self managing. Your time is worth something and eventually you might want to outsource the management. 

It will depend on what amount you get qualified for and what you can afford. One isn't necessarily better than the other. Whatever is the best deal that you find is the best one. The more units, the more likely you will cashflow but also the more expensive the property will be.

How old is the house? You are living in it? Those are the numbers after you move out? If it is newer then I would be more comfortable to pull the trigger. Also depends on how confident you are with your numbers and what your goal with the property is.