All Forum Posts by: Nick Riccio

Buy & hold. We might do some flips at some point, but that's another job. Laser focused on long-term "passive income" and generational wealth.

@Collin Wallace Chesnut The input you already received is very solid. To add, I'd say you're certainly not alone on this. I run into this with my clients a lot, and on my own house hacks. It's something that isn't talked about enough.

General road map if possible: Buy with FHA, stabilize, after 12mos try to refinance into a conventional product - or investment loan. Purchase again with FHA. Caveat is, FHA won't allow you to use the income from the unit you are departing from, so it's something to be aware of from a DTI perspective.

@Kevin Romines is spot-on with HomePossible, although it can be a tough "box" to fit-in. I'd also look into your local state programs. Here in Massachusetts - we have a state program that allows for 95% financing conventional for 1-4 units. I find a lot of states have similar programs. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment in South Boston.

Purchase price: $840,000
Cash invested: $185,000

Purchased a two family with 5% down FHA.

Purchased as a 4 bedroom 2 bathroom. Converted to a 7 bedroom and 4 bath two family as we expanded one unit into the basement.

We have officially moved out of this house hack and the total monthly rent roll now is $10,600.

What made you interested in investing in this type of deal?

The value add opportunity.

How did you find this deal and how did you negotiate it?

This was on MLS.

How did you finance this deal?

We financed this deal owner occupied using an FHA loan.

How did you add value to the deal?

Finished the basement living space and updated the rest of the home as well.

@Edwin Aguilar Congrats to you and your wife on getting started! My wife and I have been house hacking for the last several years in Boston.

As far as using FHA in this market, it's truly a numbers game. I recently had an offer accepted on a personal house hack using FHA, and we've had many clients get offers accepted using FHA from a lending standpoint. To be transparent, most times it takes several offers. With that said, I do believe you can always find a seller willing to accept an FHA offer, you just need to be committed.

As far as price-points, I would say the $400K seems low, but again, you might just need to adjust your target market.

@Jared K. I think a lot depends on your property and the #'s. at 2.875%, even with removing the MI, you're going to lose cash-flow. Also, a commercial lender is likely going to amortize your loan over 20 or 25 years instead of 30, which is another cash flow sucker. It's a delicate balance right now, but if your property can support the increased payment, and you need to use an FHA mortgage again, than it's worth it. Hope this helps

Not sure exactly what the goal is? FHA has a 203K or renovation loan product that would allow the buyer to finance renovations. This is a great tool if cash is an issue/ and leverage banks money.

Kelly,

I don't think you need to be living for free or cash flowing while living at the property, but I would say you should make sure the property will cash-flow once you move out. That is the most important aspect IMO.

Mohammed,

It's awesome that you're looking to get started with house hacking! As someone also house hacking in an expensive market (Boston), it certainly is a challenge. I would second @Brandon Rush that it's really important now to go to local meetups and networking events to start building relationships. This will make your start much easier once you are ready!

I'd say there's a lot of advice depending where you're at with your journey. My two biggest pieces of advice would be to learn as much as you can (neighborhoods, average rent, loan programs), and network as much as possible. I also think it's really important to get clear on your affordability and target purchase price, as that will often dictate the neighborhood/type of property to search for.

I think the key to making any MLS deal work is finding an opportunity for value-add. My best deal yet, came off the MLS. We quickly recognized the value-add opportunity, and had our offer accepted. Our strategy going in has actually played out better than we anticipated. I think at this point in the market it's all about creativity - almost no property in any market will be a good performer if it's on MLS.

I know you mention you don't have a lot of funds for renovations - I'd consider a renovation loan if needed, so that you can make a deal work by adding value.