Posted December 14, 2015

A Two-Minute Investment = Lifetime Dividends

If your client is a first-time homebuyer, do both of you a favor and consider a multi-unit property. Obviously, most first-time homebuyers are looking for that cute little house with a two-car garage and a white picket fence – one of the symbols of the American Dream, of course. However, consider for a moment that many first-time homebuyers are willing to look at and embrace a “tweak” to the American Dream: a revenue-generating investment. While most investment properties require a fairly significant down payment, an FHA loan only requires 3.5% (and it can be a gift). Making an even better case for this type of purchase is the size of loan FHA allows for the following sizes of properties:

o2-unit property: $347,000

o3-unit property: $419,255

o4-unit property: $521,250

Your buyer is only required to live in this property for 12 months. Once she’s hit the 12-month mark, she can slide another renter into her unit and look for a single-family residence (if she so desires). In addition to the rental history she’s built up with her other tenants, she can immediately count future rents for the unit which she’s just vacated as long as she has a one-year lease signed for that unit – all of that will be used as income in helping her qualify for the loan on the SFR (perhaps with a two-car garage and a white picket fence).

We’re not kidding ourselves into believing that every child dreams of being a landlord when he grows up, but it doesn’t hurt to have a two-minute conversation with your new buyer and present him with the option as outlined above. He’ll thank you for presenting him with all the options – and if he takes your advice, he’ll either be asking you to find a house for him in a short twelve months or look for more multi-unit properties, which means you could have a lifetime client looking to grow and manage a lucrative portfolio. We’re fairly confident that’s worth a two-minute conversation.

Expand Your Horizons

Relocation and timing don’t always coincide with one another, and that usually leads to the potential buyer signing a twelve-month lease on a rental property when she’s moving to a new city because she thinks she needs an employment history to qualify for a mortgage. For those professionals with jobs that are tied to a contract (doctor, attorney, teacher, nurse, dentist, etc.), we can close and fund 60 days before their starting that new job and use that income to qualify. Put that information in your back pocket and start marketing yourself all over the country – or around the world.

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