One couple, two incomes. Live on one, save the other. Buy first 4plex FHA. Live in one unit, accelerating savings. Accumulate downpayment for building #2. Buy building #2 with 25% down. Resist temptation to increase spending; saving accelerates due to income from building #2. Buy building #3. Rinse. Repeat. Assuming we’re talking about 4plexes that
In our business, we frequently have clients come to us with pre-approvals from direct lenders like Bank of America, Wells, etc. The clients love the banks because they promise high loan amounts and low interest rates. And, on simple deals where there are no real issues with the borrower or the property, the direct lenders
Regular readers know that I’m not a fan of using lots of debt. Debt (“leverage”) magnifies outcomes… so if you’re highly levered and the deal goes well, you do REALLY well, but if it goes badly, you get crushed. There are, however, some nuances to my view and it has to do with where you
Here’s an interesting piece re the systemic risk being created by FHA loans. For those just joining us: FHA is a program through which the federal government insures banks against losses on loans for 1-4 unit properties, allowing banks to make loans up to 97.5% of the purchase price and to people with beat-up credit.
As a result of the huge number of foreclosures across the country over the past five years, numerous states and the federal government have created all kinds of road-blocks to foreclosing on a delinquent borrower. This is feel-good stuff… no one likes to hear about families being kicked out of their homes and politicians absolutely