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      05-21-2018, 03:34 PM   #1
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Buying a multi-family for a 1st home/initiation to real estate investing advisable?

In my continued quest for looking for a "second wind" from my current career, I stumbled upon this idea that I'm sure A LOT of people are doing already since I don't know when.

We are in the process in saving up for our first home and was thinking of buying a multi family, living on one unit, then renting out the other(s). Are there any multi family owners here (better if local to Boston) that can share some advice? I just want to be able to get my feet wet on business, be it whatever type, as long as I get enough guidance.

I have a few questions about it and pros/cons from your own experience:

1. Is it really harder to get financing for a multi family since it's commercial rather than a normal mortgage for a SFH?
2. Will you advise it on a total noob to the industry?
3. Did you have to attend pricey seminars (I don't think it will help me aside from take my money) to "learn?"
4. Do you regret not doing it earlier/regret doing it at all?

Thanks for any input? Like I said, I am just in the thinking/planning phase, still saving probably until end of year or maybe even into next year.
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      05-21-2018, 06:15 PM   #2
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first question you should ask, do you want to live in an apartment and deal with needy tenants above/below and on both sides?

1. yes, most like need a larger down payment and will need to show income ability to cover for the whole building
2. yes, it is not rocket science
3. No
4. I regret not keeping rental properties longer

I would start buying fixers, live in while fixing, refinance, buy next fixer, put tenant in old house, rinse repeat. When you retire, move back into your rentals every two years, sell and move back to the next, up to a 500k tax free gain on each house (couple) if you live in them for at least 2 out of the last 5 before sale.
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      05-21-2018, 06:19 PM   #3
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Quote:
Originally Posted by boca1 View Post
first question you should ask, do you want to live in an apartment and deal with needy tenants above/below and on both sides?

1. yes, most like need a larger down payment and will need to show income ability to cover for the whole building
2. yes, it is not rocket science
3. No
4. I regret not keeping rental properties longer

I would start buying fixers, live in while fixing, refinance, buy next fixer, put tenant in old house, rinse repeat. When you retire, move back into your rentals every two years, sell and move back to the next, up to a 500k tax free gain on each house (couple) if you live in them for at least 2 out of the last 5 before sale.
All about working the tax codes baby! I plan on getting into real estate now I stop spending my spare money on cars.
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      05-21-2018, 08:40 PM   #4
W Cole
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Buying a duplex or triplex and living in one is apparently (just learned this myself) called ďhouse hacking.Ē If youíre looking for more info you may want to google that.

Getting financing on up to 4 units owner occupied shouldnít be an issue vs normal resi. The issue may be if you canít qualify for the entire mortgage, not sure if a bank will let you qualify including 3rd party income, especially if the property isnít occupied.

Look up cost segregation. I think thatís the only way you can make the numbers pencil vs just investing in th S&P. Obviously the barriers to entry are super low so any ďidiotĒ can do it, this couple with fanny/Freddie issuing debt up to 80% LTV means returns for 1-4 units properties are super low.

Also, as far as fixing up yourself. As someone with 8 years in commercial RE consulting for the worlds largest comm RE firm and who just spent 3 years rebuilding his condo from the studs in, id say be your own GC and pay subs for the major work and do a little here and there where the trades donít overlap. If the numbers donít work paying someone a market wage then donít do the deal.

Last edited by W Cole; 05-21-2018 at 08:46 PM.
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      05-21-2018, 10:48 PM   #5
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My good friend started RE investing around 2 years ago and now has about 60-80 units. Former analyst - can't even use a hammer.

It's purely a leverage and cash flow game. Example: He buys a multi family building for 300,000 (60 downpayment and 240 loan). Adds 50k to rehab and tries to refinance around 450k and take most of his money out. The rehab creates majority of his "equity" in the property, everything else is financed.

He targets ~$300 per unit after all expenses/fees. Wants to have 300 units and retire.
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      05-21-2018, 11:03 PM   #6
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although we are in vastly different markets, i would encourage your plan. you are on the right track and you have the right mindset. i have a couple of rentals in california, and it has been the best thing i have ever done. i learned everything for free on the internet. do not pay to learn, it is all already available. you will develop relationships with realtors and lenders... don't just use your friend's friend as a lender or realtor. get someone who might already be doing what you are planning to do- they have a keener understanding of that market and what to look out for.
i also have a lender that has pulled some strings and did some mickey mouse shit (nothing illegal) to make deals happen. you need to find someone that is actually on your side instead of wanting to sell you just anything.
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