All Forum Posts by: Matthew Porcaro

Any chance of finding a duplex+ and house hacking for a year?

 What difficulties are you having?

203k - buy a duplex, tri, or quad. Live in it until you have enough equity to refinance. Move out, rent all units.

Use new rental property for HELOC to use as downpayments for more BRRRR's. Rinse and repeat!

Literally the exact strategy I started with and it's been a great journey since.

 Hey Kenneth - 

I was able to finance out of my 203k 8 months after my closing. 

Just know you need to build enough equity in the rehab to refi out. They typically can refinance up to 70% of the property value. Make sure that covers your 203k mortgage and then some if you want to pull money back out. 

 Camden - 

I used this exact strategy for my first flip. 

I bought a foreclosure duplex using a 203k FHA loan. The 203k gave me enough money to rehab the foreclosure, and make it liveable.

It was a large rehab, and took 8 months to finish. Once it was done, I realized that I had built enough equity in it after the rehab to refinance out of the FHA loan (no more mortgage insurance, no longer had to live there, etc). Once I did, I rented out both units and still hold the property today.

If you have any other questions on how I did it, feel free to reach out. 

That's correct. FHA loans are federally subsidized loans. If they were open to investors, it would get abused

That said, they are a pivotal starting strategy. The leverage you can obtain from an FHA loan you don't even have to worry about using it again in the future. You can begin to use hard and private money with the fha deal in your back pocket.

The first deal is the hardest. Everything falls into place after your first deal, I promise. 

 To chime in, he is listing requirements for a HomeStyle loan, not a 203(k). 203(k) you must occupy the property, at least for the first year, or until you refinance, whatever comes sooner. 

This is what I did - it definitely got the premium down a bit. Eventually I pushed to another policy after I moved out that was close. 

Insurance is something you really need to shop around a lot for. 

Hi Brandon - this is exactly what I did as my first REI deal. To answer your questions.

1. Statute of limitations regarding owner occupancy in the 203k are only effective until up to one year after the loan. After that, they aren't able to fine you. 

2. Make sure you poll your network on what mortgage brokers they have, and once you get a list, interview them all, asking them how many 203k's they've done, and if they can give references. You MUST find someone with experience with the loan, otherwise it can get messy. I learned this the hard way. 

3. In my case, I bought a bank owned duplex, and put $100k of rehab into the property. It was a big flip. It took about 8 months after closing. Once done, I had built enough equity into the flip to refinance out immediately into a different loan. Once I was out of the 203k, I then no longer had it as my primary residence, and now rent out both units for a strong cash flow. 

4. Nope! That's one of the pro's of a 203k. You are the only "mortgage" that can bid on bank owned. 

Please reach out if you have any specific questions, I didn't have much guidance when I did it, so I love giving people the help I wish I had! haha. Good luck!

@Tre Holland if you need any help or guidance with the 203k, please let me know! This is how I did my first deal.