All Forum Posts by: Wayne B.

Hello Wayne, 

It sounds to me like you can benefit from a buyer consult from a really good Realtor or Lender. 

It is great to come to the forums of course, but as you can see, you always get many, many suggestions and ideas that are not 100% catered to you and your unique situation. 

There are many avenues you can take here in CA or in other states and learning the ins and outs in a very systematic and low pressure way would be it. 

Is there a reason why you have not had that conversation with a Real Estate professional that can guide you in your thinking? 

1. Pros and cons of condos? 

2. Starting with a SFR in CA and being a bit creative with the property?

3. Buying 2,3,4 units here our out of state and what you would qualify for in each scenario? 

4. The implications of buying multiple units (managing, taxes, etc ) 

5. Down payment, loans and financial matters 

6. Rental loans that would take the property cash flow into account and not your income… 

The list goes on. Let me know if you need a referral to a lender ? 

Good luck. 

@Wayne B. I can't say I'm very familiar with the Orlando area, but I know Pasco well. Pasco's prices are considerably less than Tampa or St Pete and it's a very easy area to invest in for a few reasons:

- Majority of buildings are 1970s or newer and block (don't buy frame in Florida if you like appreciation)

- Very easy to comp for both rents and sale price to make sure you're getting a good deal. Developers built a lot of copy-and-paste type homes and many of the neighborhoods have similar layouts. 

- Relatively less competitive than other areas in Florida so you have more negotiation power for listed and off-market deals.

The big thing to keep in mind with Pasco is that there are a lot of sinkholes in that county. Sinkholes or remediated sinkholes can cut the value of a property by 30-50% so make sure your bases on covered on the sinkhole status of a property!

Jared, thank you for your very useful tips. If you have a group that meets in the Tampa area I would love to stop by and learn a few things from you all. I'm in the area now. I can give you my contact info and vise versa. 

@Wayne B.

You've got a bunch of info here.  Just be careful of the "upsell" or provided background info....

If you were pre-approved for $350k on a conventional loan, you would be approved for less on a FHA. Bottom line is you still need to be able to qualify for the loan.

Yes, starting out with a multi-family is a common way to go. FHA loans allow the lowest money down at 3.5%. While conventional loans can be as low as 5%, that is only for single family homes. As you increase the number of units the money down increases to 20%-25% (I forget the exact number). But, its good to know that you have the credit score and reserves to qualify for the conventional loan. Just realize that the FHA will be a little more expensive --- there is not free lunch.

That being said, with the multi-family, you can use the rent from the other units to help you qualify for the property.  So, it IS possible to get a loan for more than $350k in your case.  However, it will be dependent on the property and what sort of rent you can get for the other units.

Hope this helps.  Good luck.

Hello Wayne, It amazes me that all the Newbies are so willing to jump into Investing without any knowledge. My last JOB was with a Union on Oil Tankers in 1999. While I sailed around the World I studied every minute possible. I Invested 40 years ago with a Mutual Fund guy in Seattle and made $100,000 in ten years to Invest in a Rental Property Portfolio in Tampa for my retirement. I am 74 and I sold my last house in Tampa two years ago to pay Cash for a 1500 sq. foot, 3/3 Townhome with garage and pool, like new, in a safe, quiet place in Valrico, Florida. The rest of my paid off properties are in Brazil. I did the Carelton Sheets, "Low and No Money Down," investing plan with an older Broker in S. Tampa. I attended 100 Get Rich Quick seminars and learned how to use the computer when it came out. If you do a Google Search you will find many 5 and 10 year plans with Real Estate to make a Million. I always thought that was a mistake. The one thing I learned from Robert Kiyosaki and "Rich Dad, Poor Dad," was that the most important thing is Daily Cash Flow. I joined a Stock Trading Club with 500 old guys who had a Million Dollars and all they ever wanted was a safe place to Park their Cash and go golfing. There is a progression to Investing in anything. I learned Mutual Fund investing and moved to individual Stocks. Then, Options on Stocks and finally Futures. I make my Daily Cash Flow with micro-scalping the ES mini Future. My partner makes $10,000 a day in two hours and never ends the day with a loss. With single family homes, you buy one or two to rent and fix them up and then sell to buy a Duplex or Fourplex and graduate from there to Commercial if you want to end up with a real Rental Portfolio. The best way if to Farm a Neighborhood and not be an Absentee Owner. Two years ago Robert Kiyosaki said he owned 33,000 Apartments etc. and he was only Selling. His method is the commercial use of Credit, like Donald Trump and play hardball with the Banks if things go bad. It's not the time to Buy at the Top of the Market with the Fed raising Interest rates to lower Inflation and talks of War with China. I watched NBC News from San Francisco this morning and all the talk was the $100,000 parking spot For Sale in the underground garage and not having enough energy to run the State. Idiots! I grew up in Palo Alto and made tons of mistakes. My life could have been a hundred times easier if I had the Mentor at that time. In the Viet Nam War days the only thing you could study was Law or Medicine. Girls could be Nurses or Teachers or Secretaries. There is no excuse to make mistakes now if you know how to use a computer. You can study all the Bigger Pockets books etc. Learn the methods to make Money with Real Estate Investing. The safest and easiest way to make Money with Real Estate is to Buy your First Home and Homestead it for less taxes for two years. The IRS rule for Tax-free Sale of your Residence in Online. Go there and learn the rule. You can rent for three out of the last five years to Sell Tax-free. The Method is to find a Fixer Upper and move into that as your Home. Look for a second Fixer Upper to Rent until you Sell your Residence, Tax-free when the value goes up and move into your Rental to do it again. Tax-free Money Machine. When you learn how to do Searches on Zillow, you need to look at all the selections from Land to Manufactured Homes to Townhomes and Apartments and Houses etc. No one ever explains how to easily estimate what a property is worth by finding what a vacant lot in that area is worth and adding on the New Construction Cost of a house with the same Square Footage. Then, you deduct all the negatives from the property you are looking at to get an idea of what it is really worth. Lots of properties here in the Tampa area could be built new for the same price. Just have to do your Due Dilligence. Learn to Work Smarter, Not Harder. BRRR at this time??? If you know how to play Pac Man? Then, do a Search for Trading the S&P eMini or Scalping the ES etc. Learn how to short term trade just one thing like Gold GC, until it is easy for you to pay for gas and beer. The Real Estate I have was always my Buy and Hold Investments while I did more study and traveled around the World. I own my Townhome, have Zero Debt, flush with Cash and all the property in Brazil. Now, if my Health holds out I can plan to go to beach.

@Wayne B.

If I had to start all over again, I'd look to acquire a 2-4 unit property with an FHA low-down payment mortgage.

Getting it under market value would be a bonus.

So, would using an FHA 203k renovation loan, which would allow me to buy something unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower.

Hopefully, I would increase the value of the property in 1-2 years and be able to refi out of the FHA mortgage. I'd also learn a lot about maintenance and managing tenants.

Then, with my hands-on experience, I could decide if I wanted to repeat the process or target 5+ units - which my experience would help with lenders.

Good luck with whatever you decide to do!

Hi Kristina,

Thank you so much for extending a helping hand. It was great to receive such a quick reply to my first post. I really appreciate the specifics you provided to my situation. I have to admit that I will need to go over your tips a few more times to absorb it all. In reference to your opening lines, currently I don’t have any dogs or a spouse, although I look forward to having both soon, so I guess I have the flexibility you speak of.

I didn't realize that an FHA loan would allow me to purchase a 4-unit building and that I could do it with my current budget of $65K. Wow! You mean I could hit the ground running? Sounds intriguing. You're getting me to open my field of vision and reach for something out of my comfort zone, something bigger. Those numbers you provided are fascinating. Of course, I would then have to put off for a while (the dream of) buying and living in a single-family house, which is part of the sacrifice I need to make if I want to start generating cash flow from rentals to invest into more properties. I've lived in apartments all my life – sharing walls, ceilings, and floors with sometimes noisy neighbors. I thought I was done with that, but I guess not. The fourplex is a lot more financial risk than just one house for me for $230,000.

I’ll have to make sure it’s in a growth area where those units will always have tenants, which becomes a higher priority than my own comfort of living in an area I may like. I don’t understand something: Since in January I was approved for only up to a $350,000 30-year fixed conventional mortgage loan at 4% interest, isn’t it unlikely that I would be approved for a $809,150 loan? That’s a much bigger amount, hence bigger risk to the bank, right? I’ll need to spend a little more time figuring out your last part about cost segregation and accelerating depreciation for tax savings.

I notice you live in the Tampa area. I’ve never been there, but plan to visit and scout it out in late October. Would you say Hillsborough County has more job growth and stability than Volusia County, hence a safer bet for fourplex occupancy and tenant stability? I realize that Volusia County is near Orlando, with Disney as the big job draw, but if Tampa has a lot of Tech companies, is that better for my purposes?

I was glad to see that you’re familiar with Kiyosaki’s book. You probably understood a lot more of it than I did. By the way, what types of properties do you own? Do you and your husband manage the properties yourselves, or do you hire a property management company to do it for you?

You’ve given me some tools to work with and gotten me started on a path with some direction. I’m still scared, but more hopeful. Thank you!

Wayne