Creative Hacks to Start Building Your Real Estate Empire Today
Summary
TLDRIn this video, Sean Bloomquest from Pine Financial Group discusses three innovative methods to become a landlord. The strategies include house hacking, where one rents out a room in their own property, owner-occupancy financing with FHA loans for multi-unit properties, and the 'buy, rehab, rent, refinance, repeat' model which involves purchasing, renovating, and refinancing to build equity. These approaches offer creative entry points into the rental market, emphasizing the importance of flexibility and creativity in property investment.
Takeaways
- 🏠 The easiest way to become a landlord currently is through 'house hacking', which involves buying a property and renting out a portion of it, such as a bedroom in a condo.
- 💡 House hacking can also involve buying a multi-unit property, like a 4-unit building, and living in one unit while renting out the others to cover the mortgage.
- 🏢 Owner-occupied financing is advantageous as it offers better terms, such as lower down payments and interest rates, compared to financing for pure rental properties.
- 🔄 Noom matting is a strategy where one buys a property, lives in it for a year, and then turns it into a rental property without violating loan terms.
- 🛠 BRRR (Buy, Rehab, Rent, Refinance, Repeat) method involves purchasing a property in need of repair, improving it to increase its value, and then refinancing it to pull out equity for down payment on another property.
- 💰 Equity is the difference between the loan amount and the increased property value after improvements, which can be used as a down payment for refinancing.
- 🏡 The strategies mentioned are not mutually exclusive and can be combined for different projects or stages of investment.
- 🤝 Creative thinking and collaboration with lenders are key to finding the right terms and opportunities in property investment.
- 📈 The potential for positive cash flow from day one is highlighted as a significant benefit of certain house hacking strategies.
- 🔄 Renting out units in a property you live in can help pay off the mortgage and potentially allow for moving to another property after a year to repeat the process.
- 🌐 For further questions or to explore these strategies, reaching out to Pine Financial Group is recommended.
Q & A
What is house hacking and how can it help someone become a landlord?
-House hacking involves buying a property, such as a two-bedroom condo or a multi-unit building, and renting out part of it while living in another part. This approach can help cover the mortgage and make the owner a landlord, even allowing for positive cash flow.
What are the benefits of purchasing a 4-unit building for house hacking?
-Purchasing a 4-unit building allows you to get owner-occupied financing, like an FHA loan with only 3.5% down. You can live in one unit while renting out the other three, potentially covering the mortgage and even generating positive cash flow.
What does it mean to 'Noom mat' a property?
-Noom matting refers to buying a property, living in it for a year, and then turning it into a rental property. This strategy allows the owner to benefit from owner-occupied financing terms, which often include lower down payments and interest rates.
How does the BRRRR strategy work in real estate investing?
-The BRRRR strategy stands for Buy, Rehab, Rent, Refinance, Repeat. It involves purchasing a property that needs work, fixing it up to increase its value, renting it out, refinancing it to pull out the equity, and then repeating the process to acquire more rental properties.
What are the advantages of using hard money loans in the BRRRR strategy?
-Hard money loans can finance both the purchase and rehabilitation of a property, making it easier for investors to increase the property’s value quickly. This added value creates equity, which can be used as a down payment when refinancing to a traditional mortgage.
Can the three strategies mentioned (house hacking, Noom matting, and BRRRR) be used together?
-Yes, these strategies are not mutually exclusive. For example, you can house hack a 4-unit building, fix it up using the BRRRR strategy, and then refinance it, potentially turning the property into a rental while repeating the process with another property.
What should a prospective landlord consider when looking for properties to buy?
-Prospective landlords should get creative, consider different strategies like house hacking, and talk to lenders to understand the financing options available, especially owner-occupied loans that offer better terms.
How does living in the property for a year benefit a potential landlord?
-Living in the property for at least a year qualifies the owner for better financing terms, such as lower down payments and interest rates, which are available with owner-occupied loans.
What are the typical down payment requirements for rental properties compared to owner-occupied properties?
-Rental properties typically require a down payment of 20-25%, whereas owner-occupied properties can be financed with as little as 3.5% down through options like FHA loans.
What advice is given to those interested in becoming landlords?
-The advice is to get creative with the available strategies, understand the nuances of each, and consider moving every couple of years to build a portfolio of rental properties using strategies like house hacking, Noom matting, and BRRRR.
Outlines
🏠 Creative Ways to Become a Landlord
In this video, Sean from Pine Financial Group discusses the challenges of becoming a landlord in a rising interest rate and property value market. He introduces Scott Craft and they explore three primary strategies for becoming a landlord. The first is 'house hacking,' which involves buying a property and renting out a portion of it, like a bedroom in a condo. This can also include purchasing a 4-unit building with owner-occupied financing, living in one unit, and renting out the others to cover the mortgage. The second strategy is 'nomad investing,' where one buys a property, lives in it for a year to secure better financing terms, and then turns it into a rental. The third is 'BRRR' (Buy, Rehab, Rent, Refinance, Repeat), which involves purchasing a property in need of repair, improving it to increase its value, and then refinancing it to leverage the equity as a down payment for another property. Sean emphasizes the importance of creativity and understanding these strategies to enter the real estate industry.
🤔 Moving Every Few Years for Rental Properties
The second paragraph continues the discussion on becoming a landlord by addressing the willingness to move every few years as a strategy to acquire rental properties. It suggests that this approach can be beneficial for those looking to expand their real estate portfolio. The paragraph ends with an invitation for viewers to reach out to Pine Financial Group with any questions regarding the strategies discussed, indicating a supportive community for those interested in real estate investment. The video concludes with a musical note, suggesting a positive and engaging tone throughout the content.
Mindmap
Keywords
💡Landlord
💡House Hacking
💡Owner Occupied Financing
💡FHA Loan
💡Four-Unit Building
💡Nomad Strategy
💡BRRRR Investing
💡Hard Money Loan
💡Equity
💡Cash Flow
Highlights
Creative strategies are essential in today's market to become a landlord.
House hacking is one of the easiest ways to start landlording, such as renting out a room in your first property.
A lucrative house hacking method is buying up to a 4-unit building and renting out the other units while living in one.
You can secure owner-occupied financing, like an FHA loan with 3.5% down, for a multi-unit property if you live in one unit.
Living in the property for a year allows you to leverage owner-occupied financing and then turn the property into a rental.
After a year, you can move out, repeat the process with a new property, and expand your rental portfolio.
Another strategy is 'Nomad' investing, where you buy a property, live in it for a year, and then convert it into a rental.
Nomad investing also allows you to benefit from better loan terms designed for owner-occupied properties.
'BRRRR' investing (Buy, Rehab, Rent, Refinance, Repeat) is another effective method for acquiring rental properties.
BRRRR investing involves purchasing a property needing work, rehabbing it, and then refinancing to pull out equity.
The equity gained from rehabbing the property can serve as the down payment when refinancing.
Using hard money loans, such as those from Pine Financial Group, can help finance both the purchase and rehab of a property.
All three strategies—house hacking, Nomad investing, and BRRRR investing—can be used together to build a rental portfolio.
These methods reduce the barriers to entry into the rental property industry, making it accessible even with limited cash.
Understanding and creatively applying these strategies can make landlording easier and more profitable.
Transcripts
it's really not that hard you just have
to get creative in today's day and age
to become a
landlord hey guys it's Sean bloomquest
Pine Financial Group we're work together
so you succeed if you're watching us on
Facebook or YouTube please like the
channel subscribe hit the notification
Bell so you're getting all the upto-date
content I've got my good friend Scott
Craft here with me today we're going to
talk about three easiest ways to become
a
landlord I know you've got plenty of
rental properties what's the first
easiest way for someone if they want to
become a landlord and get in this
industry yeah I mean it's tough and it's
getting harder right because interest
rates are going up property values have
skyrocketed over the last decade they're
not really coming down right so you got
to get creative so I think that probably
the easiest way right now to to become a
landlord is is house hacking right and
this can take many different forms this
could be as simple as you know you buy
your first two-bedroom condo and you
rent out one of the bedrooms right uh
well guess what if you've got one of
those bedrooms rented with to a roommate
you're a landlord right so that's
landlording but it can also be way more
than that so one house hacking
opportunity that I think is fabulous
right now is you could buy up to a 4un
building and still get owner occupied
financing for it an FHA 3 and a half%
down mortgage on a 4unit building so
long as you live in at least one of
those units so picture this you've got a
for unit building with you know two
upper level units and two lower level
units you pick one of those to live in
you rent out the other three more than
likely those other three units are going
to pay your mortgage so you know you
might even be positively cash flowing as
of day one and and you're living in it
right you're living in it so you get
owner occupied financing you have to
live there for up to a year and then
after that year is up you can go
somewhere else and potentially do it
again so you can just rinse and repeat
and go buy another four player
potentially exactly and that's what I
like to call the number two easiest way
to become a landlord that's called Noom
matting okay right where you buy one
property live in it for a year and then
after your year is up you can go ahead
and turn it into a rental property
you're not violating the terms of your
loans so long as you live there for at
least a year and the benefit to these is
you're getting owner occupied Finance
right so what that means is if you're
going to live in the property the lender
is going to give you better terms
if this was just a pure rental property
right so often times on a rental
property You're Expecting what 20 25%
down uh probably a higher interest rate
like I said you could buy up to a 4 unit
with a three and a half% down FHA back
to mortgage um with a lower interest
rate nice I mean that's that's crazy
it's crazy powerful how easy that can be
exactly yeah so that's number two okay
so number three I'm assuming is going to
be the one that we deal with quite a bit
in our industry yes so a lot of people
do this it's called bur investing that's
buy rehab rent refinance repeat okay
okay so the idea here is you buy a
property that needs some work ideally
using a hard money loan from someone
like fine Financial because we can not
only we'll not only finance the purchase
but we'll also Finance the
rehabilitation aspect of it so you buy
the house you fix it up you make it
nicer that will increase the value of
the property and that spread between
what you borrow from A lender and the
value in the property when you're done
fixing it up that's called your Equity
yeah and then when you go down to
another lender to refinance us out for a
30-year fixed rate mortgage that Equity
is now your down payment sure so it's a
great way to pick up a rental property
without you know necessarily having to
have all this cash available to you for
uh you know 25 30% down mortgage yeah
and you're getting a lower loan to begin
with because you've already built that
Equity into it so you should be able to
cash flow much easier on that property
exactly and the greatest thing about
these three options is they're not
mutually exclusive sure you could
basically do all three of these
strategies uh you know inter intertwined
with each other you can buy your for
unit fix it up then refinance it right
so it's really not that hard you just
have to get creative in today's day and
age to become a landlord but it is is
possible yeah just understand those
three different strategies and their
nuances and then just start implementing
them depending on how that project
shakes out you know one might work
better for this or one might work better
for this and then just run with it I
mean they're they're like you said
they're about as easy as it is for an
entry barrier to get into this industry
absolutely do you have any other
thoughts on this that you want to put
out or uh uh biggest thing I would say
is just you know get creative look at
what's out there for sale talk to a
lender see what kind of terms they can
offer you on an owner occupied loan and
you know just see how you could picture
this working for you and if you're
willing to move every couple years I
mean these are great ways to pick up
rental properties that I've done in my
own life right on yeah yeah that's great
and and if you've got any questions on
that bird strategy talked about or
anything else don't be afraid to reach
out to us at Pine Financial group.com
[Music]
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