How-To Get Government $$$ to buy your FIRST Apartment Complex - Real Estate Investing for Beginners
Published: 2020-05-11
Status:
Available
|
Analyzed
Published: 2020-05-11
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
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The FHA 203k program allows for the purchase of multifamily properties up to four units with minimal down payment.
"be able to buy a duplex a triplex or quad Plex and I've run some scenarios that will be going through later in this video on how you can buy a four unit apartment complex for really a minimal amount of money"
Pending
Living in a multifamily property purchased through this strategy can result in having all living expenses covered or even generating additional revenue.
"if you use this kind of strategy you could live in one of those neighborhoods and either have the entirety of all your bills paid or you could have the entirety of all your bills paid plus getting some extra side revenue"
Pending
Multifamily properties can be financed with 30-year mortgages at interest rates around 3.5% to 4%.
"you can get access to long term financing typically you can get a 30-year mortgage on these kinds of multifamily properties and as it is right now you can get a loan for about three and a half four percent at a maximum"
Pending
The FHA 203k program provides funds for home repairs, with the down payment and closing costs potentially being rolled into the purchase price.
"the government will actually give you the money to fix up a house you still have to pay the down payment which is three and a half percent and then there's usually some closing costs but you can typically get the seller to roll that into the purchase price"
Pending
A 3.5% down payment on a $200,000 multifamily property purchase would be approximately $7,000.
"on a $200,000 unit or $200,000 purchase you're looking about seven thousand down"
Pending
Historically, financial institutions would appraise the value of money invested in real estate renovations at three times the cost of the repairs.
"back when I was doing foreclosure financing and I was doing assessments for a lot of financial institutions because I've done over 1400 of those as of today most banks when it came down to financial appraisals and assessing they would typically assess the value of money you would put into real estate at three times the cost of putting it in"
Pending
The FHA program can loan up to 125% of the total project cost, which translates to an additional $25,000 for every $100,000 invested.
"the government will still loan you one hundred and twenty five percent of the total cost of the project which is totally awesome that's $25,000 per hundred thousand"
Pending
The USDA offers a no-money-down loan program for properties in rural areas, which applies to most of the state of Ohio.
"USDA has a program for like that too if you want to buy a property in a more rural location and for for the most part in the state of Ohio it's like the whole state they'll do it with no money down"
Pending
A strategy exists to reconfigure a four-unit apartment complex into an eight-unit complex by adding additional access to units.
"they would take a four-plex where your apartment in the units would have like a 2-bed 2bath and then they would reconfigure add additional access to it and they would take go from a four unit apartment complex to an eight unit apartment complex"
Pending
An individual successfully used a low-money-down financing strategy to convert multifamily properties into 8-10 unit complexes, generating $30,000 per month in income and several million dollars in equity.
"I know a guy who's done this with three properties in one of the highest cost areas of North America and we're not talking just the United States we're talking Canada too and he went in and did this strategy took a large large unit low money financing very very minimal money down he hacked it up into even more units turned it into either an eighth or I want to say a ten unit apartment complex with low financing and he is making thirty thousand dollars per month several million dollars worth of equity"
Pending
House hacking, a strategy of living in one unit of a multi-unit property while renting out the others, was common in the past and is now regaining popularity with the internet.
"these kinds of things they're called house hacks today these kinds of things used to be super common back in the day and it's kind of one of these weird things where the knowledge was almost lost and now it's just coming to be a popular thing with the advent of the Internet"
Pending
Successfully utilizing the FHA 203k program for multifamily properties requires time, effort, and research, potentially involving up to 100 hours of work.
"people my own family like I've said have done this successfully it takes time it takes effort it takes research you might have to work a little bit but to be honest with you guys anybody that says you don't have to really work for these things as lion tea and they're probably trying to sell you some sort of gimmicky you might have to invest a hundred hours worth of research and looking and effort and things of that nature"
Pending
A $500,000 property appreciating at 5% annually yields a $25,000 equity gain, which equates to $250 per hour of effort invested if 100 hours are spent.
"if you have a half million dollar property that appreciates it 5% a year that's a $25,000 equity game per year you spend a hundred hours on it that's two hundred and fifty dollars an hour you're paying yourself back in equity"
Pending
A triplex property with two one-bedroom units and one two-bedroom unit was found on the MLS, with a spreadsheet of the numbers to be provided.
"this is a triplex and they have listed the data on the MLS which is the the real estate agent side of what like Zillow or realtor is I will post in the description a copy of the spreadsheet with the numbers this is a triplex property and there are two one-bedroom units and there's a two-bedroom unit"
Pending
A triplex property generates rental income of $1,395, $777, and an additional unit that serves as a write-off.
"you've got one unit making thirteen thirteen hundred ninety five dollars per month you got an up unit number two making seven hundred and seventy seven dollars per month and then you got the third unit which is going to be a write-off"
Pending
A three-unit property is FHA eligible and appears to be in good condition, not requiring immediate rehab funds.
"it's three three housing units in one location FHA eligible it looks to be in pretty decent shape so you're not even going to have to ask for rehab money in this case"
Pending
A triplex property generates $2,172 per month in rental income, with one unit provided for free to the owner.
"in this situation we've got a the property making two thousand one hundred seventy two dollars per month with a free housing unit you get a live they're free"
Pending
The FHA 203k program allows for the purchase of multi-family properties up to four units with minimal upfront costs.
"you can also buy a duplex a triplex or quad Plex and I've run some scenarios that will be going through later in this video on how you can buy a four unit apartment complex for really a minimal amount of money"
Pending
The monthly mortgage payment for a $350,000 property at 3% interest over 30 years is $1,476.
"your mortgage payment on a 30-year note at three percent interest as a whopping one thousand four hundred seventy six dollars per month"
Pending
FHA programs offer interest rates below 4% for multi-family properties, significantly lower than commercial loans for investors with multiple properties.
"as it is right now you can get a loan for about three and a half four percent at a maximum as compared to somebody like me I'm not eligible for these programs because I own a hundred and forty rentals and I just can't do it and typically when I go to a bank and ask for a commercial loan on say a trailer park or a laundromat or more quad plexes within my own portfolio they charge me even with low interest rates right now about five five and a half percent sometimes six ins in some cases but with these FHA programs you can get sub four percent"
Pending
The net income from the triplex property after the mortgage payment is $696 per month.
"so your gross income off that property after your mortgage payment so your income after your mortgage on this a six hundred and ninety six dollars per month"
Pending
Annual property taxes for the triplex in Columbus, Ohio are $4,000.
"now of course is gonna be taxes on this terrible thing which in this wonderful neighborhood of Columbus Ohio are four thousand dollars per year"
Pending
The FHA 203k program allows borrowers to finance the cost of repairs for a property, which is an uncommon feature.
"and then the other thing that makes this program just insane is the fact that you can apply for something called 203k financing which is something I almost never hear about on YouTube or the internet because the government will actually give you the money to fix up a house"
Pending
After mortgage, taxes, and accounting for free housing, $363 per month is available for repairs and insurance.
"so you're left with three hundred and sixty three dollars to spend on repairs and insurance"
Pending
Closing costs associated with FHA loans can often be rolled into the purchase price and financed over the loan term.
"you still have to pay the down payment which is three and a half percent and then there's usually some closing costs but you can typically get the seller to roll that into the purchase price so it's financed over a 30-year period or whatever your loan dictates"
Pending
A 3.5% down payment is typically required for FHA loans on multi-family properties, making a $200,000 purchase require around $7,000 down.
"so you typically you can get in and out of these loans for three and a half percent down which means on a $200,000 unit or $200,000 purchase you're looking about seven thousand down"
Pending
Monthly insurance for a triplex property is estimated to be under $100.
"insurance on a place like that realistically should run you less than a hundred dollars per month"
Pending
The FHA program allows for up to 125% of the project's total cost to be loaned, providing a 25% buffer for cost overruns.
"the government will still loan you one hundred and twenty five percent of the total cost of the project which is totally awesome that's $25,000 per hundred thousand so let's say you have a half million dollar job and you go over you're still allowed a leeway of a hundred and twenty five thousand dollars"
Pending
After PITI (Principal, Interest, Taxes, Insurance), $236 per month remains for repairs, with an initial net cash flow of $263 before repair allocation.
"so now we're left with two hundred and sixty three dollars per month with principal with principal interest taxes insurance that's what piti means if you see on a spreadsheet or on a rental calculator that you've spent $200 for piti means principal insurance taxes interest on your loan so you're left with two hundred and thirty six dollars per month in money that should be set aside for repairs"
Pending
USDA offers no-down-payment loans for properties in rural areas, but unlike FHA, it does not include a repair program.
"USDA has a program for like that too if you want to buy a property in a more rural location and for for the most part in the state of Ohio it's like the whole state they'll do it with no money down but the USDA doesn't have a repair program like FHA does"
Pending
A general rule of thumb is to allocate 10-15% of income for repairs, maintenance, and capital expenditures.
"generally a rule of thumb is ten to fifteen percent of every dollar you bring in needs to be set back for repairs and repairs and maintenance and capital expenditures"
Pending
The first-year return on a $12,000 investment is over $25,000 in equity gain, representing more than double the initial investment.
"so our return is a little over twenty five thousand now can anybody tell me what the percentage return is on the 12,000 investment if you're making back 25,000 in equity a year"
Pending
A strategy exists to reconfigure four-plexes to create eight units, significantly increasing revenue while maintaining low interest rates.
"they would take a four-plex where your apartment in the units would have like a 2-bed 2bath and then they would reconfigure add additional access to it and they would take go from a four unit apartment complex to an eight unit apartment complex increase the revenue of that apartment complex severely while still having the extravagantly low interest rates"
Pending
An individual successfully converted multi-family properties in high-cost areas (including Canada) into 8-10 unit complexes with low financing, generating $30,000 per month and millions in equity.
"I know a guy who's done this with three properties in one of the highest cost areas of North America and we're not talking just the United States we're talking Canada too and he went in and did this strategy took a large large unit low money financing very very minimal money down he hacked it up into even more units turned it into either an eighth or I want to say a ten unit apartment complex with low financing and he is making thirty thousand dollars per month several million dollars worth of equity"
Pending
The FHA program is designed for purchasing multifamily properties of four units or less with a 3.5% down payment.
"FHA loans have existed forever and they accept or they expect people to go and buy multifamily properties for units or under and use that loan program with only 3.5% down to go and buy an apartment complex"
Pending
FHA program loans have a 30-year repayment term.
"with the FHA program it's a freakin 30-year payment"
Pending
House hacking, a strategy of using multi-unit properties to live for free or at a reduced cost, was common historically and is becoming popular again due to the internet.
"these kinds of things they're called house hacks today these kinds of things used to be super common back in the day and it's kind of one of these weird things where the knowledge was almost lost and now it's just coming to be a popular thing with the advent of the Internet"
Pending
Encouragement to actively pursue real estate investment, utilizing online resources for research and learning.
"please take my advice go out and get in the game this is something that you can do get on the internet start googling words and terms that you don't understand"
Pending
FHA loans are designed to facilitate the purchase of multi-family properties (up to four units) with a low down payment of 3.5%.
"FHA loans have existed forever and they accept or they expect people to go and buy multifamily properties for units or under and use that loan program with only 3.5% down to go and buy an apartment complex"
Pending
A future segment will cover strategies for buying properties off-market.
"we'll be doing a segment here soon on how to buy properties off market"
Pending
The FHA 203k program offers a 30-year payment term for financed repairs.
"with the FHA program it's a freakin 30-year payment"
Pending
The return on investment for purchasing a multi-family property using FHA programs is estimated to be between 2.0x and 2.4x.
"so 2.4 2.0 for return on your investment which is just astronomical guys"
Pending