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  • Steven Fletcher

Your First Purchase

I tell everybody I like that their first property needs to a multifamily purchased through the FHA (Federal Housing Administration) program.


You only get so many opportunities to put down less than 20-25% for an asset that can make you money and/or allow you to live for free, nonetheless a small apartment building.

With an FHA loan, you can put down as little as 3.5% for a 2-4 unit structure, move-in, improve it, and control an asset you couldn't take on with a higher down payment (all while learning the nuances of underwriting, lease agreements, management, marketing, maintenance, and renovations).

The typical buyer for these properties are people like you: somebody who wants to own, save money, and create some value along the way.

The goal isn't to learn how to fix toilets and re-seal windows.

Sentiments are different if you're purchasing an asset to live in vs. rent out- individuals are willing to pay a premium for personal uses and you'll likely be competing against them for these property types.

This will make the acquisition process harder but also exposes a reality in many markets.

The properties that qualify for the FHA program are often valued at a premium to comparable ones given the lower down-payments, credit requirements, and personal attachment for buyers that use it.

It's not about yield for most- it's about controlling overhead.

After 1 year, you can lease your unit and operate the property or continue to live there- some nice optionality.

The first property doesn't need to be a home run, but it should provide avenues to add value and be able to pay for itself once you're gone (and with a return if you do it well).

Over time, that small multifamily property will continue to marinate as you live for free, tenant's pay down your debt, and the land/structure hopefully appreciates.

The hardest part is putting the seeds in the ground- getting the down payment together, due-diligence compiled, securing a strong entry price, finding somebody to check your work, etc.

Bad things will happen but if you stay the course, you have a great outlet to grow your personal wealth and knowledge.

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