All Forum Posts by: Matthew Porcaro

In my personal opinion, as a new investor, you should not buy in hopes of appreciation. 

Keep it simple, are you getting more in rent each month than you pay for all expenses (mortgage, tax, insurance, capex..)

Cash flow is king no matter what the market, so look for healthy rental markets using tools like rentometer.com

Homestyle loans are similar, and don't require owner occupant, but they require a much higher down payment as well as higher credit score. 

@Erica Winship

Hi Erica - very sorry to hear about your loss, but happy to hear you’re looking for your best interests in the future with what you’ve been given.

I agree with Brett above me. If you’re already currently renting, why not buy a 2, 3, or, 4 unit property, live in one unit, and rent out the rest. Not only can you live potentially mortgage free. You may be able to cash flow as well.

During this time; your tenants are paying your mortgage, and you’re putting equity into the property, that you can use to get into future deals.

For your situation I think this is the best way to get started. You can use an FHA loan for this, which means you only need to put 3% down payment.

 Only certain lenders offer the program. What I suggest is googling "203k loan in (your state here)" and look at the big players.  Give them each a call, and let them know you're interested and you'd like to learn more. 

Be sure to ask them how many 203k loans they've done, and if they have any references from those. This is CRUCIAL as 203k loans can become a nightmare if the loan officer is not on top of their game. 

 So a 203k is a rehab loan. This means that you are able to wrap the cost of the rehab of a distressed property into your mortgage. 

The power in this loan is that with this you are able to offer on foreclosure and bank owned properties, which are only open typically to CASH ONLY offers. 

This means you have a leg up against the competition, because you're able to get into a property for only 3.5% instead of the whole price!

 Hi Zach - 

A HUD consultant was required for my rehab on my 203k property. It was a large rehab, about $90k worth of work.

When you ask about your involvement, you will need to stay on top of paperwork, but as far as "running the job" or doing any work, you shouldn't be involved at all. That's your general contractors job. 

In my case, I did all of the paperwork for my contractor, gave it to them, and just made them sign. The paperwork is where most contractors slip up, so if you take initiative on it, you can be sure it's getting done quickly and effectively. 

That's great! Only a 203k would let you get to this honestly haha. I make $2000/mo net cash flow from my first house hack, which started as a 203k. 

If you're barely covering your cost, it's not a great deal. You want your deal to cashflow HEALTHILY.

It sounds like you said the value went up quite a bit on the property, so ideally you should have some equity you can pull out to leverage yourself into your next deal.

If so, that's an option you have. If not, you can just continue to save down payments and find more rental property deals to build your portfolio.

Whatever you choose, good luck!

 You would want to use a 203k loan for this. This loan wraps the rehab cost into your  mortgage. It's the best way to kill two birds with one stone. 

Ask around your family and friends for mortgage brokers they know. Call each of them up, and ask them if they have DONE 203k loans (most will say they can do them, but very few have actually DONE them). Make sure they have experience actually doing them start to finish. If they're not familiar, it can be a royal pain. Trust me, I dealt with it. 

That said, when all is complete, it's the best bang for your buck and a great way to get a property with lots of equity very quickly.