Creative Hacks to Start Building Your Real Estate Empire Today

pinefinancial

3 May 202405:29

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

00:00

🏠 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.

05:02

🤔 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

A landlord is an individual or entity that owns property and rents it out to tenants. In the video, becoming a landlord is the central theme, and the discussion revolves around different strategies to make this process easier, especially for beginners in today's challenging real estate market.

💡House Hacking

House hacking refers to a strategy where someone purchases a property, lives in part of it, and rents out the other parts to cover the mortgage or even generate income. The video emphasizes house hacking as one of the easiest ways to become a landlord, particularly by purchasing a multi-unit property and renting out the units not occupied by the owner.

💡Owner Occupied Financing

Owner occupied financing is a type of loan that offers favorable terms because the borrower plans to live in the property. In the video, this type of financing is highlighted as beneficial for house hacking, allowing buyers to purchase multi-unit properties with lower down payments and interest rates.

💡FHA Loan

An FHA loan is a mortgage insured by the Federal Housing Administration, designed to help low- to moderate-income buyers. The video mentions using an FHA loan with only a 3.5% down payment as a viable way to finance a multi-unit property, making it easier to enter the real estate market as a landlord.

💡Four-Unit Building

A four-unit building refers to a property with four separate living spaces, which can be rented out. The video suggests that purchasing such a building is a strategic move for house hacking, as it allows the owner to live in one unit while renting out the other three to potentially cover the entire mortgage.

💡Nomad Strategy

The Nomad strategy involves buying a property, living in it for a year, and then moving to another property while renting out the first. The video describes this as an easy way to build a rental portfolio over time, leveraging owner occupied financing repeatedly to acquire multiple properties.

💡BRRRR Investing

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. This real estate investment strategy involves purchasing a property that needs work, renovating it, renting it out, refinancing it to pull out equity, and then repeating the process with another property. The video discusses this as a method to acquire rental properties without needing a large upfront capital.

💡Hard Money Loan

A hard money loan is a type of short-term loan often used by real estate investors to finance the purchase and rehabilitation of a property. The video mentions hard money loans in the context of BRRRR investing, where these loans are used to finance the initial purchase and renovation before refinancing into a traditional mortgage.

💡Equity

Equity refers to the difference between the market value of a property and the amount owed on it. In the video, equity is highlighted as a critical concept in the BRRRR strategy, where the value added through renovations increases the property's equity, which can then be used as a down payment when refinancing.

💡Cash Flow

Cash flow in real estate refers to the net income generated from a rental property after all expenses are paid. The video discusses cash flow as a key benefit of house hacking and BRRRR investing, where the goal is to generate positive cash flow from rental income, meaning that the property brings in more money than it costs to maintain.

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.