All Forum Posts by: Matthew Porcaro

 Hi Eddie - thanks for reaching out!

I actually have since finished the rehab, refinanced out of the 203k, and now rent out both units! I should really do a new post covering everything. This deal really changed my life. 

You can only do the work yourself if you get a 203k “streamline” loan. That means the work is under $30k (it might be a tad higher now). But if you said all the pipes were removed, it may cutting it close and the whole point of the 203k is to wrap your rehab costs into your mortgage. 

That isn’t to say if you make your planned scope of work enough to get “up to snuff” for the bank, that you couldn’t begin to work on it further after you close out of the rehab process with the bank. 

It is your house, and you do whatever you want to it thereafter. 

Those are some huge questions, with a lot of strategy behind it. 

It's not all that simple. There are plenty of resources out there I'd start with. 

I also highly recommend @Jonathan Twombly and @Gino Barbaro as being some of the best in the business as far as apartment buildings is concerned!

There is nothing more you can do except take it one step at a time. 

Learn as you go. The obstacle is the way. Do you have to find a deal? Go find a deal. Don't know how? Call a realtor. They don't answer? Call another. 

The best way to go about this entire game is take it one step at a time. 

It took me THREE YEARS to figure this out for myself. 

Finally, after reading countless books, watching videos, attending seminars, I realized there was no better time to get started than "now", and no "book" or anything was going to be the golden ticket for me to start. 

You need to get comfortable with being uncomfortable, and learning as you go. 

@Tyler Hespeler No worries Tyler. Glad to hear your response. 

Rentometer is like every other tool. It’s a rough gauge. Obviously there are nuances that you have to account for, but most of the time it’s ballpark. I also just use craigslist and look for comparable listings to gauge where I’m at in the market. 

Taxes are public record and if you want to double check you just check out the towns online portal. Most everywhere you can find what the yearly property taxes are. Insurance is really just completely subjective; but you can get an average by looking it up online. 

Also make sure it’s not in some kind of flood zone that would definitely boost the price a bit. 

 I would do exactly what I did!

Buy a foreclosed small multifamily with a 203k FHA loan. Only put 3.5% down, and use the 203k to wrap the rehab costs into the mortgage.

After rehabbing the foreclosure, you will build equity into the property. You will also now have a property that you can live in one of the 2 to 4 other units (small multifamily) and rent out the rest of the units. Those tenants will be covering your mortgage payment every month, and then some! 

In my case, I bought a foreclosed duplex, rehabbed it, and rented out one until until I was able to refinance out of the 203k FHA loan. Now I rent out both units, which gives me $2000/mo cash flow + I built $130,000 of total equity into the property after a $90,000 rehab that was built into the mortgage.

My mortgage on the property is for $350,000, but it appraised for $480,000, so I have $130,000 of equity I can do whatever I want with. 

 I'm going to be blunt. I personally thing wholesaling is a waste of time. 

For the amount of time and money you spend finding deals, you can put that effort into saving a down payment for a distressed property that you can rehab, and turn into a cash flowing rental property. 

Go to your local real estate investing association meetings, and look for any full-time investors that would be looking for an intern. Just help them out in exchange for their knowledge about finding good deals and building equity and cash flow. 

Also, you don't need as much for a down payment as you think. FHA loans only require 3.5% down, which is small enough money for someone at any income level to afford. You can buy a distressed property, rehab it, and rent it out, giving you a huge jumpstart in your real estate investing career.

Double posted by accident!

FHA only requires you contractually to live there for one year.

It's possible that if you use a 203k loan and build enough equity during your rehab, that you can refinance out of it before the year is up, and into a conventional mortgage where you no longer are under the FHA rules.

Think of this in terms of cash on cash return. 

If you put a 3.5% down payment, and you buy a small multifamily with an FHA or 203k loan, you're maximizing your CASH ON CASH return, since, you are putting down a relatively small amount, in exchange for someone else paying off your property.

Your tenants are ultimately paying down your principal, so if you can use the least amount of cash possible, there's no reason not to!

Buy and hold! 

Flipping and wholesaling is not the same as investing. It is a service, a job. 

That isn't to say that you shouldn't be utilizing these strategies to build cash reserves, but once you have the cash your goal should be putting that cash in cash flowing rental properties!