All Forum Posts by: Thelmo Rego

I’ve come into this and it was true for me. To use FHA, I had to move smaller and smaller. Triplex, then duplex, then SFH. It’s really stupid but it is a requirement. They want to see you moving to “better” situations and to them, having one neighbor is better then two I guess. The one workaround that may work, is telling them that your employer moved a bit far away, so your looking to move to that area to be a reasonable distance to work and they may make an exception in that case.

First you want to see if it’s even possible for you to put mobile homes and rent them. Most parts of the country are not allowing mobile home parks of any kind to be built anymore.

Pretty straightforward BRRRR strategy, nice job. Only thing I would have done differently was I would have moved into the unit worth 2500 and rented out the unit worth 3500. Granted you personally don’t live as nice. But it’s a sacrifice that would be saving you 1000 a month. Good luck with the refi!

Think about it like this, you buy a duplex in a B- area for 200,000 that is turn key and rents for 2,000 a month. PITI is 1,400 and you cash flow 600 (before repairs, cap ex, etc.) per month. That’s a pretty good deal right? Now say you bought the same house for 130,000 because it was a “rathole” and you put 20k into the rehab and now it’s worth 200,000. Now your PITI is 900, so your cashflow is 1,100 (before repairs, cap ex, etc. but you are much less likely to need any major repairs soon because you just rehabbed it all). On top of the obviously better cash flow, you also now have up to 50k worth of equity that you can use to pull your initial capital out+ whenever you want when another good deal pops up! That’s the reason to buy rat holes.

I think there are still good deals on the mls but they are harder to find. My advice is to go for the real fixer uppers. The work needed will turn off some which will be less competition. That will allow you to pick it up for a better price and have the ability to create more sweat equity. Also the listed price means nothing to me. Run the #s carefully and put in an offer that makes sense. You can even send those #s to the listing agent with your offer to show that your not just low balling and it doesn’t make sense, you did your homework. Granted you very well may have to do that a hundred times to get the deal but it would be well worth it.

Why SFH? It seems like the expense Column would stay pretty close to that even with a triplex or 4plex. Wouldn’t 4 rents of say $900 per month be better then a SFH making $1200 and when it’s vacant making nothing?

Please let me know when the next one is happening as well, would love to come. 

Thank you everyone for your replies so far, just out of curiousness, why do you think I need 20-30% down? My understanding of FHA loans is that you can be approved with a credit score of 580 and a down payment of around 3.5 to 5%. I know for the 2nd property and going forward I need more skin in the game. Am I missing something on the FHA?

Hello everyone, Long time reader 1st time poster, I wanted to go thru my general getting started strategy with you all to see if there is anything major that I am missing or should know before getting started. I am hoping to start with either a triplex or quadplex. In my area these are roughly going for 180k to 200k from what I have seen and they cash flow really well, a two bedroom in this area ranges from $800-$1200 depending on the area so your talking about 3-4 k gross if they are all rented. My plan is to do the BRRRR strategy. Any way, one of my biggest concerns is getting the financing, I have saved about 10k of start up money and I'm hoping to do a FHA loan for the first house. My concern is that my credit isn't great, it's in the low 600s. Everything I read says that above 580 I should qualify for a FHA but I'm concerned about it. Also at my current day job, I make an about 35k per year so I'm hoping that the banks will take into consideration the potential rental income of the property when making a decision. Any advice or thoughts that any of you have, I would really appreciate! Thank you so much.