You need to have equity! Here's how!
I haven't been on WSO in years. I used to frequent the site back in my college days and learned quite a bit. I'm now in the resi-mortgage space and invest in student rentals. I'm looking to give back and help others fresh in their career.
The best way to build wealth is through ownership. Working for a large firm is great, but if you don't have carry or invest in your own deals, you are missing out.
I've built a student housing portfolio of ~80 beds over the last three years.
Here's how you can buy 5 rental units with less than 10% down in under 24 months: Any first-time home buyer can do this:
Purchase a 4 unit building using FHA financing with a 3.5% down payment. The other 3 units should cover most if not all of the mortgage payment.
Live there for 1 year, learn how to be a landlord, and start budgeting/saving for the next purchase.
After 1 year you can move out of your unit, rent it out for cash flow, and purchase yourself a house or condo with 5% down which is the minimum requirement on your second purchase.
Live in that house/condo for 6-12mos, or until you’re ready to move again, then rent it out for cash flow and purchase another home that you plan to settle down in for 5-7 years.
Hold those properties for 10+ years, use the equity for more investment opportunities and enjoy an abundance of income tax savings. Time in the market beats timing the market.
I hope this helps. Drop any comments/questions below and I'll answer over the next few days.
Pure genius. How on earth did you come up with this?
Something I've done and possible if you follow Fannie/Freddie/Ginnie guidelines.
I am developing a similar method to become a real estate titan with little-to-no-money.
Thinking of calling it BRRRR for short.
Wait till you hear about it.
I'll be able to help so many when they read about my method.
Big deal. You only have 4 Rs in yours.
My idea is BRRRRR. Its going to be insane. I have this little known trick where I am going to buy complete shitholes and then renovate them with stainless steel appliances, backsplash, and granite countertops. After doing this, I will be able to raise rent to a certain level. Its crazy I know, but dont tell anyone my secret.
I too will be able to help so many when they read my method.....for a small monthly fee of $7.99. They can also attend my meetup where I too will help investors. My next meetup is in a Walmart parking lot. The fee to attend is $500, but if you act now, we are offering a 2% discount, so only $490. Reserve quickly as seats are filling up to find out how you can go from no upfront capital to being worth $100M.
Why do you need to live in the 4 unit for 1 year? And why 6-12 months in the second home?
Thanks
FHA loan requires you to live in the property (intend to live in) for one year as your primary residence. After the year is up, you can move out and turn it into a rental.
With a condo/single-family if you put a low down-payment and call it a primary residence, same thing. However, you can move out early and trade up from a condo to single-family for more space.
This is only partly true. Fundamentally correct, but not technically correct.
W
Appreciate it bro
how much you're net worth
This is great [Mortgage Bond]. Thanks for sharing. For those that don’t know - this is also what’s called “house hacking.” Great way to start building wealth.
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Who is going to enforce that you can't rent your multi-family financed with FHA to tenants?
Idea sounds great. Implementation/tracking sounds awful.
Pretty easy to enforce actually. You can't use an FHA to buy a multifamily. Now will that stand up to legal challenges? Not sure. However, I am also not sure who would have the capital to challenge that, given that the future beneficiares all are broke and the past beneficiaires all don't give a crap anymore.
Works great until you get outbid by someone putting down a real down payment
1) Does this work in the UK?
2) Are you not FUCKED if interest rates skyrocket?
Wouldn’t just get a 5Yr fixed? Can refi when rates are low
In July 2017 the 10 year treasury yield was hovering around 2.25%. 6 months later, that was more like 2.75%. Someone absolutely used your logic in December 2016, and here we are five years later, and rates are 75 to 100 bps higher.
The point being, "rates will be lower" isn't an investment strategy, any more than "bet it all on red" is an investment strategy. It's a gamble, pure and simple.
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