Saturday, August 24, 2013

Live "Rent Free" in America, Why Not?

American's bred and born in America are less apt to see the potential for the FHA 203k to build wealth, but foreign born Americans see it right now and access this powerful strategy to get established and make money in America.

In the mid to late 1990's it was the Hispanic immigrants that were taking advantage of the FHA 203k program by the hundreds if not thousands. They would purchase a four unit  building and rent out the other units to family members and know they were going to get their rent every month, then we saw many numbers of our Asian brothers and sisters doing the same thing, and now we are seeing it with immigrants from the middle east and the Hispanic community is doing it all over again.

This is a unique way to get one family established in America, rent out two units which typically can cover the mortgage payment if you do it right, you live rent free in one unit and the forth unit brings in the groceries.

Realtors who are catering to this client base should be on the lookout for mixed use buildings with three and four flats over a store or two, or 5-8 unit buildings that can be converted to four four-bedroom units to maximize the rent potential. I have seen a four bedroom single family home that was fire gutted sold for $2,500 to an FHA buyer and an eight unit building that had been vacant for years sitting there gutted to the studs that sold for $2,500. These we call "cash cows" because the rental income for a four bedroom unit is considerable.

Ten years ago in SF one of my clients was able to get $2600 per each of his three four-bedroom units, and the second example above we talked the housing authority into taking over the entire building so the client was able to have 100% of their rent electronically deposited on the first day of each month. He was able to let an inherited building provide his retirement secure income on a mixed use building. It was exciting to see him as he realized a long time dream that he never felt he would achieve as it unfolded to reality for him. Did I mention that he lives there in a newly fixed up studio apartment in his own building?

Section 8 tenants requires a whole lot more training...

Mike Young, 203k Team Leader    Mike ready for your 203k order

With offices coast to coast and HQ now at PMB 168, 5055 Business Center Drive, Suite 108 Fairfield, CA 94534 1.707.812.7668. We have ten offices in CA covering both CA states, NorCAL and SoCAL

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