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Because yes, once we get pre qualified, preapproved, now we need to figure out what type of loans we should be looking for, right, So let's talk about let's get into that because there's different programs for different people who need different types of assistance.
But let's get into that a little bit. Yeah, man, so there's tons of loans out there, right, So you have the traditional loans, you know, FHA, conventional VA loans, you know, you have Knacker I know someone mentioned out there. But let's do a brief overview, right, faha, minimum five eighty credit score. You can buy one to four family properties. All properties must be on the occupied for at least one year. Okay, again one to four family own the
occupied properties. You can even buy with a FAHA a mixed use property. Right. So, now, a mixed use property is basically a commercial building. Now we have a lot of these mixed use properties here in New York where you might have a bodega on the bottom and three apartments on the top. Right, that's a mixed use property. So FAHA will allow a home buyer to buy this
mixed use property. As long as the residential square foot which is at least fifty one percent and the like likeness of the building is more residential in stature, FAHA will allow you to buy a commercial property. So that's perfect. Let's just say we have any business owners here in the chat right now, watching this live or going to
watch this on the replay. If you have a business that needs a brick and mortar, right, you can go with FHA loan buy this mixed use live upstairs, have your business downstairs, and put as little west three and a half percent down for a mixed use property that is a home run. FAHA also allows you to get rehab money with the two or three K program where you can get one hundred percent of your rehab court as well. Right, So FAHA is a terrific program you can go up to. Like I said, four families were
putting down three and a half percent. Now, some of the cons about FAHA is obviously the PMI. Right. The PMI is if you put down less than ten percent is for the life of the loan, and if you put down ten percent or more, the PMI automatically goes away year eleven. Right, So that I would say that was probably one of the biggest cons with FAHA. But despite what everybody would believe, FAH loans do close really quickly. Right.
A lot of people out there think, oh, if you're getting an FAH loan, it's going to take forever, and you got bad credit, you don't really qualify. No, that's not the case. FAHA is a great program. It gives you a higher approval amount sometimes than conventional lutgage is because the debts and income racial requirement is higher than conventional. Now with conventional let's.
Let's let's let's do this though, Let's let's before you go on, let's really take our time. Let's just take our time. I want to make sure everybody understands. So even terms like PMI, somebody might not understand what that is, right,
primary mortgage insurance. And even like okay, the FAHA loan, somebody asks like it's this first time home by its like, you can use that for your first time home, right, and it allows you to put three point five percent down as opposed to a traditional twenty percent down, but you have to pay the PMI until you reach twenty percent.
Right, No, No, So to answer the question about the prompt the first time home buyer, FAHA is not just for first time home buyers, right.
It's not just for first time home buyers. But you can use it if you're buying your first time home, right.
Correct, you can use it if you buy your first home. But most people think if I own a home, I can't do FAHA, which is not the case. You can do FHA as long as it's going to be your primary residence. Now, the PMI, the private mortgage insurance on FAHA is called mortgage insurance premium that only goes away if you put down ten percent or more, and it goes away year eleven with a conventional mortgage. If you obviously put down twenty percent up front, then you have
no PMI. But if you put down less than twenty percent on a conventional mortgage, then that PMI will go away wants you. You can request for it to go away once you get about twenty percent equity in the home. Right. So it's a little bit different than FHA. You don't have to wait that long of a time frame to get the pm I removed the conventional loan. You can get that pm I removed much faster. And it was something else you said in the ever shot. What else did you say? I just had a brave freezon.
No, I think that you think that was it. I just wanted to just make sure that they was just understanding everything. But yeah, I think I think that was it. But somebody asked the question too though, from the chat. Somebody in the chat trenton Stewart. He said, what if he's ten ninety nine and not w two?
Good question, great question. So if you are ten ninety nine, you are considered self employed, Trent, So it's very important remember two year work history with all of these traditional loans. Right, So if you are ten ninety nine, you need to be ten ninety nine for two years. But the most important thing, Trent and anyone else who is self employed or teny nine, your tax returns need to need to line up appropriately. So let's just say you get one
hundred thousand dollars on your ten ninety nine. If you write off ninety thousand and tell Uncle Sam that I only made ten thousand, you pay income taxes on ten thousand. That ten thousand is the money that we're going to use to qualify you. And let's just be real, ten thousand enough to buy the home. Right So if you know you are self employed and you write off a lot, this is why it is extremely important in the beginning to have a great lender and start mortgage planning. Right.
Everybody type and chat mortgage planning, especially my self employed people. You have to plan for your mortgage. You just can't walk out and say, hey, I'm going to buy a house today and you don't know what your finance is looking like. So having a great lender and also having a great account and a CPA who understand and real estate to guide you to let you know, okay, if you pay less taxes this year, if you write off less you're going to pay X, y, and z amount
of income taxes. Is it worth it for you to buy a house and use this income or is it better for you just to put twenty percent down and go with a non traditional loan where we don't need tax returns. Right, So you have to look at both sides of defense to see what's most beneficial to you as that entrepreneur and trying to get into real estate.
Somebody else, ex can you have more than one FHA at that.
Time if you meet the one hundred mile room right. So if you buy an FHA to say duplex in Brooklyn, right, and then you're moving to Atlanta and you want to use FHA again to buy another duplex in Atlanta, and you can prove that you are moving there is work related, then yes, because it's old Brooklyn and Atlanta as well over one hundred miles away. So that is really one of the only circumstances that I've seen get approved when you are looking to have multiple FAHA loans. But if
you're looking to house hack right. Prior to conventional loans changing the guidelines about a year ago, the strategy was by the four family use FAHA. You know, refinance into a conventional, then go into a three family and then use FHA again. But now that conventional allows five percent down payment on multifamilies for your primary residence. Now you don't really need to use FAHA more than one time.
You can now go the first property FAHA, then the second property, which could be the three unit, Now you can use conventional and put the five percent down because it's now your primary residence. Right. So the strategy for the four three to one change a little bit with that guideline, which is which is a home run for everybody looking the house hack. But no, you don't need to have two FAH loans at the same time to continue to grow your real estate portfolio using the house
hacking strategy. MG. You brought up the FAH loan.
We talked about conventional, but when we were at invest Vest, one of the biggest seminars that people were lined up for was the VA loans. So can you touch on that and tell people about the benefits of that and salute to everybody that's a veteran.
Yeah, shout out to everybody who's a veteran. You know, I got my Pops flag right here, so I want to show this man rest in peace, Pops man. So shout out to all the veterans. Yeah, yeah, yeah, Mike, I appreciate that. Shout out the pops right there. So all all the vets, all my military folks, you got a special place in my heart for sure, So salute to all of y'all. But yeah, with the VA loan, you could do a one hundred percent financing on your
primary residence. Some lenders would go down as low as a five to eighty credit scores as well, but tip usually six hundred to six twenties ideal, and you can buy one to four family on the occupied properties. One of the great things about VA loans you're going to have great interest rates even in today's market. They're a little bit lower than FHA, and it has no PMI on the loan, which is a home run right. And you can use a VA loan twice as long as
you have enough eligibility right to do so. So VA is a terrific program. I encourage all my military folks out there who's watching this live to please use that VA loan. Use it to the highest and best use. If you can get a multi family with it with your first one go ahead, get that multi family first, and then you can go ahead and probably get a single family with it later on down the road. So Va is an amazing product and I hope more people use it.
So okay, so let's get back to the steps. But before we get back to step last, the last detour, you talked about the four three two one. Can you just explain that for people that don't know what that is?
Okay, So the four to three to two one strategy is only for the folks out there who want to be a landlord. If you want to be a landlord type landlord and chap, please, I want to see.
This is so, this is what this is for the real estate investors.
This is what the real estate investors. But you're using low down payment loans and your house hacking, meaning you are going to live in this property for the requirements that the guidelines are saying. You're not saying that, hey, I'm going to live here and I don't live there. Right here, I earn your leisure an MG, the mortgage God, we do not participate in mortgage fraud. Let me be very clear, Okay, we do not participate in that. Okay. This is the disclaimer. Here, Okay, you must live in
a property for at least twelve months. That's what the godlines state and the guidelines are in your favor two house acts, So do it the right way so that way you don't have the compliance police knocking on your door. Now, the goal of this is to build your real estate portfolio. Four unit first, if you live in an area that has four units, live in it for a year maybe two years. Now you don't have to refinance out of that FAH loan. So let's people, since we started off,
we just left VA loans. Think about this. You're a veteran. You started off with your VA loan, first one hundred percent financing for a family. Then you go FAHA for the next one, the three family three point five percent down. Then the next one you can go convention them with a duplex five percent down. And then that last property, single family, you can go back to VA if you have enough eligibility and get one hundred percent financing on
that one with no PMI as well. So now the cash flow that's coming from all of these units, that for that three and that two, which what's that seven non units right there, can now pay for your dream home So the purpose of the strategy is most people when they buy their first home, they're over extending itself. Everybody trying to keep up with the Joneses. Everybody don't I don't know what the hell's going on these days. Nobody believes in starter homes. Everybody wants to make mansion
right now, I just don't understand it. So instead of you people who don't want to start a home getting a nice little townhouse or something like that, start off with the multifamily, build that portfolio so that way, by time you get to that one family in four years, five years, now you've got cash flow coming in and you can potentially live for free. So that's on the basis of the four to three to two bus strategy.
So for okay, let's for the people that need a little bit more further explanation on this. Right to the time, the American dream is to buy a home, a single family home, right, white picket fence, the whole nine. And people think, like, that's your dream home. They want to drop by their dream home. But and there's some debate on this, but a home is not technically an asset. If it's not producing cash flow, it can actually be
a liability ken. So the idea is to say, okay, instead of trying to buy a one family dream home right away, buy a four family home in a not great neighborhood, but like you know, an uppercoming neighbor because the four family home is going to be expensive. But usually don't even have four family homes in great neighborhoods anyway. So you buy a four family home in a relatively slightly dangerous neighborhood, and you live there, and you're a landlord,
and you rent those other three units out. Right Now you establish yourself as a landlord, and you're getting rental income from three tenants after you lived there for a year two years, right, then you can leave rent the other one out. Now you have four units that you're actually getting rental income from. Now you can move to
a slightly better neighborhood. The houses will probably costs a little bit more, but you'll have an asset that's actually producing income that you can add to your W two or ten to eety nine income also, and you repeat the process, and now you have two other incomes coming and then you you're living there. Then when you move out after a year two years, now you have seven and now you have seven units from four family building, a three family building, you do the same, and a
good neighborhood in a two family home. Right, And so by the time you've done this, it might take eight years, but by the time you've done this process, you have nine nine units that's producing income, and now you're able to actually a have enough income that's coming in that you probably don't even have to work a real job anymore because you have nine units that's producing income, and now you're able to move into the dream house and you have the income from the units that's paying for
the house, as opposed to what most people do. They move into their dream house, they don't really have enough money to pay for it. Then they're just working every single month to just maintain the mortgage and they don't have enough money to invest, they don't have enough money to buy any additional real estate. They get stuck in a thirty year mortgage. That's not a recipe for building wealth. That's a recipe for being in debt until you're seventy
years old. So yeah, that's kind of the ABC version of it. But I think that that's kind of important to like fully lay out because everybody, and I might not get it at first, like which you know, you've been doing this for twenty years. So some people are just getting into real estate today, right, so they got to kind of be read. Even how you think about buying a home kind of has to be rewired in your brain so you can just kind of have a different perspective.
It definitely will change your perspective on how you look at it. And I remember five years ago hearing you say it, and obviously we tweeted it a little bit, but it was mind blowing as I was sitting in my home doing that interview. But Matt, I got it. There's another great question. And I know the four three two one was a great strategy, but there's another strategy that I know you like talking about. And Terry m asked the question. They said, I'm about to get married
own a townhouse. Can we still use my fiancee' fha loan before we get married? And so we're talking about two single people, two different loans before they get married. I know this is one of those topics you love talking about.
Yeah, go for it then, yeah, I mean divide and conquer, right, I definitely love that strategy and congratulations to you, guys, But I would say before you tie to not if you each can qualify for your own property and it be your own occupied. You live in one, he lives in one until you get married, then I think it's a great way to start your life together. Right now, you buy a multifamily, he buys a multifamily. You each use FAHA if you both can qualify independently of each
other and build your folio that way. So now, if you can start with a three or four even a duplex. Right say you live in an area that doesn't have three or fours, you start with a duplex. You get a duplex, he gets a duplex. Now you have four units. Now you have cash flow coming in that could potentially pay for now your dream home as well. Now, one of the great things about buying a multifamily, especially with FHA loans, guys, the rental income. The market rental income
can be used to help you qualify. Lenders will use seventy five percent of that rental income. So for example, if the gross rental income is one thousand dollars, a lender will use seven hundred and fifty dollars as income to help you qualify. Forward now. I saw in the comments go while ago someone was asking about Airbnb income and does lenders like Airbnb income with these multifamilies. Their question is no, The lending landscape has not caught up to the times that we are in down to allow
Airbnb is very unstable. So what lenders are always going to use right now, guys, is market rent right, not rent that you're going to get from Airbnb or if you got to make in your house a content space or anything like that. The guidelines have not caught up to that. But divide and conquer is a great, a great strategy for all you couples out here who want to be landlords and grow your real estate portfolio.
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