Creative Hacks to Start Building Your Real Estate Empire Today

Summary

In 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.