This Loan Let Me Buy A Fourplex With Almost No Money | Keith Weinhold

If you want to get started in real estate with a bang, you can do exactly what I did. This program still exists. With an FHA loan, you can buy a single family home, duplex, triplex or fourplex. A fourplex is the biggest property that you can do it with. So I really recommend that you do it with a fourplex. For economies of scale, if you live in one unit for at least 12 months, if you can make a 3.5% down payment, and then the third thing you need is just a minimum credit score of 580, then that's all you need. Yes, that's all you need.

There's many ways to invest. There's many ways to build wealth. For us, real estate was an obvious choice for many real estate, they're not even quite sure how to get started. So how did you get familiar with real estate? How did you get started? How did you decide that real estate was the wealth building vehicle for you?

Well, it's because of my friends. It really goes back to the old Jim Rohn quote which you've almost certainly heard, but it's so prescient here. And that is you are the average of the five people that you spend the most time with. Take your five closest friends, take their morals and values, they're probably pretty close to your morals and values. Take their formal educational attainment level. Take the way that they dress, take, take the time that they go to bed at night. You know, if you average the five, that's about how you are. If you want to change yourself, change your five. Just a great quote from the legendary business philosopher Jim Rohn. But I had found that two of my five closest friends, about 20 years ago, flip and Danny, what they had done is they made their first ever home, first ever property of any kind, a fourplex building where they lived in one unit, rented out the other three. So because this is two of my five, it sort of took on this context of normaly to me, it didn't seem scary. And I learned and I did indeed follow through and make my first ever property of any kind, a fourplex building. Like Flip mentioned in the bio there, where I lived in one unit and rounded out the other three. And this is something very actionable for you, the listener and viewer here. If you want to get started in real estate with a bang, you can do exactly what I did. This program still exists. With an FHA loan, you can buy a single family home, duplex, triplex or fourplex. A fourplex is the biggest property that you can do it with. So I really recommend that you do it with a fourplex for economies of scale. If you live in one unit for at least 12 months, if you can make a 3.5% down payment. I didn't have a lot of money. I was just a workaday job employee at a state dot. But I think a lot of people can come up with a 3.5% down payment. And part of that or all of it might even be able to be a gift. And then the third thing you need, besides that 12 month owner occupancy period in one of the units in the 3 1/2% down payment is just the minimum credit score of 580. That's all you need. Yes, that's all you need. Now there are some things that you need to avoid and properties that you need to avoid, but that's how you can start with a bang, live in one unit, rent out the other three and get the appreciation and the tax benefits on an entire building. That's exactly how I began. You probably saw a picture of it. It was a 295,000 DOL modest fourplex and the rents in each door were 725. I can still remember that. That is a great actionable way for you to get started. And if you have Veterans Administration benefits, VA benefits, it's 0% down. A 12 month owner occupancy period and your credit score doesn't even have to be that good. So that's how I began and that's how you can still get started with a bang today with an FHA loan on a fourplex building.

I love that you just gave very actionable advice. Yes, right. Because very many times we talk at such a high level that people aren't sure where to get started. So when I'm on the phone with investors, I get, you know, where do I start, which path is right for me, who do I trust? And Keith here as a guest on our show just gave you one of the ways to get started and a very actionable way if you want to do that fourplex. So just curious, Keith, when you got this fourplex, did you do the rehab or did you hire contractors?

I did it myself. I didn't know how to do it. I'm still not a good handyman nature at all. People must think I'm a good handyman since I own all this real estate in multiple states, but I'm really not. I just know how to identify a good deal and then put the people in place in order to manage it. But yes, I did some of the rehab myself. Actually one of my two friends that had also made their first ever property fourplex building. I still remember he showed me how to remove the vinyl and replace it with hardwood plank flooring, knock out a pony wall and add this plank flooring. But like that's the most sophisticated type of rehab that I've ever done. It is simple to figure out but I really needed someone to come in the door and show me how to do it. So it actually didn't take too much rehab. It definitely wasn't any sort of burr strategy or fix and flip. It was really a buy and hold property.

I love it. And so last question on this topic because I love this part of getting to know you. Do you still own the 4 Plex or did you sell it?

No, I sold that 4 Plex after holding it for 11 years because I wanted to take the equity from it. The return from home equity or property equity is always zero and by 2013 I was aware of that. So what I did is a 1031 tax deferred exchange from that fourplex building into an 11 plex building, adding little or none of my own money. I just extracted the equity from a smaller property because it had grown and I use that as a 20% down payment on an 11 plex.

Nice. I love it. What a great strategy. Thank you for sharing that story.

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