Jeb - Great job explaining. As an experienced investor I understand your "numbers" explanation. But most newbies still cannot digest your concept. BTW, multi-units rents in SOCAL has increased significantly whereby one can cash flow at 5% cap rate. But these 4 plex in SOCAL is hard to find. Many are off-market. But FHA 3.5% and VA -0- down can buy these 4-plexes in SOCAL as "Owner-occupied " buyers. and can finally cash flow. Most critical is one's income. It should be $150K W-2 income or higher to qualify under your scenario. DTI, underwriting, etc will be challenging. Most people are scare to do this strategy but is definitely doable under the right circumstances. Other markets in the US are much more doable due to much lower cost 4 plex. Agree?
So glad found your channel and plus you are based in California which is great. I’m hoping to learn a lot to successful find the right home by this year or next year as a first time home owner.
Great real-life example, thanks! Love house hacking. This particular deal banks on appreciation and lacks in cashflow, even in the perfect scenario. Not something I'd invest in, but maybe a way for someone thinking long-term to get into the So Cal market!
Just got an offer accepted. I got a question for you. Can you do a video on a bigger down payment vs buying mortgage points. I have a few extra bucks and not sure which one I should do if either. I’d love to get my mortgage as low as possible but then again I don’t own any furniture or even any cookware.
Quick question, can you verify the PMI I think it’s 1.05% because you are financing over 95 % and over $625k . I am talking about a Single Family. It might be different for a multi family like the one you are talking about. Great video !!! Lots of great info!!
Sell it or rent it out? I just bought a new home, and getting my previous home ready to sell. I am wondering whether is should rent it out or sell it. I could list for $500k, I owe $140k on it, my interest rate is 2.25% on a 15 year loan. I could probably rent it for around $2800, maybe more now that rents are up. It’s a single family home in a nice neighborhood in a town that is fairly attractive to younger folks, because rent and homes sales are a little less than all the so troubling homes that are more like bedroom communities. My plan was to sell it, take the profit and invest it in the stock market, then when prices drop, possibly purchase a multi-family home to rent out. What do you think I should do?
@@diose0078 I sold back in March, and closed in May. Made exactly 20% over asking, which came to $90k. I am going to purchase a multi-unit rental if home prices come down.
@@jesse_-, Thank you for your reply, that was very nice of you. I would to purchase a multi -family property too. But I'm with you "have to wait until the prices come down"
Yes. BOA used 50% of the projected rents to help me qualify for my triplex. Ive heard some lenders use 75% but mine didn’t because I didn’t have history landlording
That example is a big stretch maybe you’re paying only $838 but you also have the liability of everything that breaks in the other 3 units. I don’t think I’d do it with that math but it’s close
That's a huge risk knowing that it was $800 apartment in Long Beach. Probably a d area.. meaning it will be hard especially in California to evict those people and get someone to pay higher. Especially they can squat and you can't do anything..
I have a home which I used a conventional loan to purchase. A friend of mine recently told me I can still be considered a first time home owner if I use fha for my investment property this way I put down 3.5 percent and hopefully I don't have to live in the investment property? Can someone confirm if this is accurate or if they heard of such a thing? I know each state is different but I've never heard of this before.
There's a few things going on here. First, you don't have to be a first time home buyer to use FHA so you can use it anytime regardless of how many homes you own. Secondly, FHA doesn't allow the purchase of investment properties,only primary homes. This is nationwide and not state specific
So an investment property such as a three unit can be considered a primary property as long as you live there for certain period of time? I would have to rent out my single family home. Other then that I would have to put down 20 percent to purchase a 3family unit/duplex.
These numbers would not work for an FHA in CO because of the self-sufficiency test. Not sure if loan requirements are different in CA, but in my case I found out the hard way after trying to pursue that very same strategy.
@@JebSmith nationally down 5.5% MoM per NAR. Sales vol down 20% YoY, rates doubled (you didnt address that at all) inventory up huge, mortgage costs up 3x from ‘15, DTI of 2 most resent years buyers at ‘07 levels….. and then you have what Powell just elucidated a few hours ago. Any thoughts on this strategy assuming prices crash and rates dont hit the 0 bounds any time soon?
@@JebSmith I’m well capitalized and I’m looking at four plexes in Orange County California. But without the ability to re-fi of PMI with prices going down, it’s just gone from bad to worse. A nice big tail wind is inflation so I think investing in this space over the next 20 years will be great, but this method doesnt seem to have a big enough margin.
Hello! did you get a response to your question? i'm negotiating a home with fHA but has tenants and actually I don't want them, I want them to leave once I buy
Im in orange county, can you hook me up with a good lender? On paper I have a company with revenue of 150k plus my 45k a year job but my real income is mainly my job and small % of the revenue which is 50k a year after tax to work with but on paper what the banks sees I'm around 180k-195k yearly. I have no current debts and have 805 credit score and I really want to learn how to build wealth but all these bigger pockets real estate books are using unrealistic numbers compared to what its like in California. I really want to learn more and talk to the right lenders and realtors/brokers. My sister is a real estate broker but shes extremely defensive and will not facilitate my jump into real estate. Currently have access to 80k in liquid funds.
It’s hard to use words to convey my heartfelt appreciation for the kind of help Mrs Patrisiah has rendered for me. she's always the best service and good person I am very great-full when I see that My Loan payment has been approved through her service. She's the beat admin, and I’m so really happy with her good working software.
Jeb, you must be smoking crack to think your scenario could possibly be a positive investment strategy, Too many things can go wrong with three tenants in a slim margin deal. What do you do if a tenant needs HVAC replacement, or another one a new stove, or the third just quits paying all together. Then, you know how long the eviction process takes in California. Too much money and too much risk if something goes south...
I did this in a much cheaper market(Baltimore). Purchase price 245k for triplex
Rate 3
Rents 1956
Mortgage 1406
Market rents for all 3 : 3100
Nice
💪
Based slumlord
Nice, do you have contracts when there are issues with plumbing, heat or electrical
Any update on your units?
Jeb - Great job explaining. As an experienced investor I understand your "numbers" explanation. But most newbies still cannot digest your concept. BTW, multi-units rents in SOCAL has increased significantly whereby one can cash flow at 5% cap rate. But these 4 plex in SOCAL is hard to find. Many are off-market. But FHA 3.5% and VA -0- down can buy these 4-plexes in SOCAL as "Owner-occupied " buyers. and can finally cash flow. Most critical is one's income. It should be $150K W-2 income or higher to qualify under your scenario. DTI, underwriting, etc will be challenging. Most people are scare to do this strategy but is definitely doable under the right circumstances. Other markets in the US are much more doable due to much lower cost 4 plex. Agree?
If I'm a 1st time buyer , and I travel for weeks at a time for work. I can short term rent me home while I'm on the road , right?
So glad found your channel and plus you are based in California which is great. I’m hoping to learn a lot to successful find the right home by this year or next year as a first time home owner.
🙏🙏🙏
First comment here 😃😊. Notification 🔔 is always on.
🙏
Great real-life example, thanks! Love house hacking. This particular deal banks on appreciation and lacks in cashflow, even in the perfect scenario. Not something I'd invest in, but maybe a way for someone thinking long-term to get into the So Cal market!
💯💯💯
Just got an offer accepted. I got a question for you. Can you do a video on a bigger down payment vs buying mortgage points. I have a few extra bucks and not sure which one I should do if either. I’d love to get my mortgage as low as possible but then again I don’t own any furniture or even any cookware.
Cash is king........If you're comfortable with the payment, hold onto the cash.
Excited for a video talking about interest rates reaching 4%
Quick question, can you verify the PMI I think it’s 1.05% because you are financing over 95 % and over $625k . I am talking about a Single Family. It might be different for a multi family like the one you are talking about. Great video !!! Lots of great info!!
Sell it or rent it out?
I just bought a new home, and getting my previous home ready to sell. I am wondering whether is should rent it out or sell it. I could list for $500k, I owe $140k on it, my interest rate is 2.25% on a 15 year loan. I could probably rent it for around $2800, maybe more now that rents are up. It’s a single family home in a nice neighborhood in a town that is fairly attractive to younger folks, because rent and homes sales are a little less than all the so troubling homes that are more like bedroom communities.
My plan was to sell it, take the profit and invest it in the stock market, then when prices drop, possibly purchase a multi-family home to rent out.
What do you think I should do?
Jesse, I think you should keep the house and rent it.
@@diose0078 I sold back in March, and closed in May. Made exactly 20% over asking, which came to $90k. I am going to purchase a multi-unit rental if home prices come down.
@@jesse_-, Thank you for your reply, that was very nice of you. I would to purchase a multi -family property too. But I'm with you "have to wait until the prices come down"
@@jesse_-You are suppose to do loans that’s how you get rich off real estate, never sell, only rent, if you have to sell or want to do a 1031 exchange
If you sell you have to pay capital gains tax.
Does the bank factor in the 3 units you’ll be renting out as income for purposes of the debt to income?
Yes. BOA used 50% of the projected rents to help me qualify for my triplex. Ive heard some lenders use 75% but mine didn’t because I didn’t have history landlording
Yes, they will use 75% of the rents
@@Adventure_blac did you get a fha loan? I don't have history as a landlord either...
That example is a big stretch maybe you’re paying only $838 but you also have the liability of everything that breaks in the other 3 units. I don’t think I’d do it with that math but it’s close
Yes, this example doesn't discuss the maintenance, etc...
That's a huge risk knowing that it was $800 apartment in Long Beach. Probably a d area.. meaning it will be hard especially in California to evict those people and get someone to pay higher. Especially they can squat and you can't do anything..
Hi. If I already have an fha for my current home and want to rent this one out, will I have to convert my loan?
How do I buy a 2nd multi family with fha if I have a duplex already but want to buy a triplex
Are there any loans that can lump in update/repair costs?
Yes, FHA 203K
@@JebSmith can you speak on down payment assistance for FHA loans?
I have a home which I used a conventional loan to purchase. A friend of mine recently told me I can still be considered a first time home owner if I use fha for my investment property this way I put down 3.5 percent and hopefully I don't have to live in the investment property? Can someone confirm if this is accurate or if they heard of such a thing? I know each state is different but I've never heard of this before.
There's a few things going on here. First, you don't have to be a first time home buyer to use FHA so you can use it anytime regardless of how many homes you own. Secondly, FHA doesn't allow the purchase of investment properties,only primary homes. This is nationwide and not state specific
So an investment property such as a three unit can be considered a primary property as long as you live there for certain period of time? I would have to rent out my single family home. Other then that I would have to put down 20 percent to purchase a 3family unit/duplex.
These numbers would not work for an FHA in CO because of the self-sufficiency test. Not sure if loan requirements are different in CA, but in my case I found out the hard way after trying to pursue that very same strategy.
Now that prices are crashing and rates have doubled, is there any way to make this hack work still?
Where are prices crashing?
@@JebSmith nationally down 5.5% MoM per NAR. Sales vol down 20% YoY, rates doubled (you didnt address that at all) inventory up huge, mortgage costs up 3x from ‘15, DTI of 2 most resent years buyers at ‘07 levels….. and then you have what Powell just elucidated a few hours ago. Any thoughts on this strategy assuming prices crash and rates dont hit the 0 bounds any time soon?
@@JebSmith I’m well capitalized and I’m looking at four plexes in Orange County California. But without the ability to re-fi of PMI with prices going down, it’s just gone from bad to worse. A nice big tail wind is inflation so I think investing in this space over the next 20 years will be great, but this method doesnt seem to have a big enough margin.
All you can go up to is 4units on a FHA loan?
Yes
nice
When qualifying for an FHA loan for a property with tenants will get lender include the future rental income in bri your equation as well?
Hello! did you get a response to your question? i'm negotiating a home with fHA but has tenants and actually I don't want them, I want them to leave once I buy
How’d it go? D
There are a lot of holes in this video
Sucks that people raise rents just to make a profit
Im in orange county, can you hook me up with a good lender? On paper I have a company with revenue of 150k plus my 45k a year job but my real income is mainly my job and small % of the revenue which is 50k a year after tax to work with but on paper what the banks sees I'm around 180k-195k yearly. I have no current debts and have 805 credit score and I really want to learn how to build wealth but all these bigger pockets real estate books are using unrealistic numbers compared to what its like in California. I really want to learn more and talk to the right lenders and realtors/brokers. My sister is a real estate broker but shes extremely defensive and will not facilitate my jump into real estate. Currently have access to 80k in liquid funds.
www.jebsmith.net/referral and it will connect you with my local pro
It’s hard to use words to convey my heartfelt appreciation for the kind of help Mrs Patrisiah has rendered for me. she's always the best service and good person I am very great-full when I see that My Loan payment has been approved through her service. She's the beat admin, and I’m so really happy with her good working software.
Jeb, you must be smoking crack to think your scenario could possibly be a positive investment strategy, Too many things can go wrong with three tenants in a slim margin deal. What do you do if a tenant needs HVAC replacement, or another one a new stove, or the third just quits paying all together. Then, you know how long the eviction process takes in California. Too much money and too much risk if something goes south...
In New England we have section 8 where the state pays most of their tenants rent in many situations the rent is just about guaranteed 👍🏿