[{"@context":"https:\/\/schema.org\/","@type":"Article","@id":"https:\/\/moneydoneright.com\/fast-money\/side-hustles\/house-hacking\/#Article","mainEntityOfPage":"https:\/\/moneydoneright.com\/fast-money\/side-hustles\/house-hacking\/","headline":"How 20-Something Me Bought a Fourplex in L.A. With Only $15k Out of Pocket","name":"How 20-Something Me Bought a Fourplex in L.A. With Only $15k Out of Pocket","description":"Many people think that investing in real estate is impossible, or at least impossible...","datePublished":"2017-03-27","dateModified":"2022-07-30","author":{"@type":"Person","@id":"https:\/\/moneydoneright.com\/author\/logan-allec\/#Person","name":"Logan Allec, CPA","url":"https:\/\/moneydoneright.com\/author\/logan-allec\/","identifier":4,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Money Done Right","logo":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","width":488,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/2018\/03\/Invest-In-Real-Estate-In-Your-Twenties.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/2018\/03\/Invest-In-Real-Estate-In-Your-Twenties.png","height":430,"width":825},"url":"https:\/\/moneydoneright.com\/fast-money\/side-hustles\/house-hacking\/","commentCount":"3","comment":[{"@type":"Comment","@id":"https:\/\/moneydoneright.com\/fast-money\/side-hustles\/house-hacking\/#Comment1","dateCreated":"2022-01-23 08:20:07","description":"Where in L.A. did you find a VACANT fourplex for $435K?  When was this and how much was the rehab?  You can't even get a condo for that price anymore?","author":{"@type":"Person","name":"Derrick","url":""}},{"@type":"Comment","@id":"https:\/\/moneydoneright.com\/fast-money\/side-hustles\/house-hacking\/#Comment2","dateCreated":"2018-08-27 12:21:21","description":"Hi Cuong,\n\nNot to steal Logan's page (great page and article by the way!), but I am actually in the process of a househack in LA right now! I just wrote about it for Bigger Pockets. Might be lots of information you're looking for. Happy to talk as well!\n\nhttps:\/\/www.biggerpockets.com\/renewsblog\/house-hacking-la-full-time-student\n\nAnd congrats to Logan and your wife!\n\nBest\nWynton","author":{"@type":"Person","name":"Wynton","url":"http:\/\/wyntongrant.com"}},{"@type":"Comment","@id":"https:\/\/moneydoneright.com\/fast-money\/side-hustles\/house-hacking\/#Comment3","dateCreated":"2018-02-05 20:22:29","description":"Logan, I\u2019ve discovered your site from biggerpockets. I currently live in Irvine - CA and plan to move to Pomona - CA soon some time this year or next. Ive been reading up lately on house hacking and you\u2019re the only person from LA that claims yourself to be a house hacker!! I would appreciate alot if you could connect and share with me your experience house hacking in LA suburb!","author":{"@type":"Person","name":"Cuong Ngo","url":""}}],"about":["Side Hustles"],"wordCount":777,"keywords":["schema"],"articleBody":"Many people think that investing in real estate is impossible, or at least impossible to do in their area.They often think they need hundreds of thousands of dollars in the bank to get started.But you don’t! \u00a0I got started investing in real estate in my 20s, and I certainly didn’t have hundreds of thousands of dollars in the bank \u2014 in fact, I was still paying off my student loans \u2014 nor did I have crazy connections or family money to help me get started.Table of ContentsToggleHow I Invested in Real Estate in My 20sIt’s a No-Brainer!FHA Self-Sufficiency RuleWant to Learn More?How I Invested in Real Estate in My 20sMy first property was a 4-unit using FHA 3.5%-down financing in a suburb of Los Angeles.The purchase price was $435,000 with a $15,000 seller credit.I lived in one unit and rented out the other three. Single at the time, I also rented out the bedroom in my unit and slept on a mattress in the living room.This is what is known as “house hacking” in the real estate world, and it\u00a0proved to be a major boost to my net worth. \u00a0I’ll give you 4 reasons:I was living for free while my friends were paying through the nose for L.A. rent,I was building equity as my tenants paid down my mortgage,I was cash flowing hundreds of dollars a month, andI got 4 units an hour from Downtown L.A. for a mere $15,000 out of pocket.And because I only put 3.5% down, I still had a lot of money saved up (+ cash flow from the tenants) to put into other real estate deals like these:A single-family home purchased from a distressed seller (he purchased for $210,000 during the boom; I got it for $75,000 cash and then\u00a0sold it for $125,000),A beachside luxury spec home development deal along the California coast, andA buy, rehab, retenant, refi apartment syndication in Arizona.Those last two deals were syndications. \u00a0If you’re interested in larger-scale\u00a0deals like these\u00a0and have at least $500 to invest,\u00a0click here to check out Fundrise.Anyway, back to house hacking…It’s a No-Brainer!The FHA fourplex strategy really is a no-brainer for single Millennials. If one does nothing else in real estate, they will have succeeded by getting into a fourplex as a young man or woman with only 3.5% down.Assuming they bought good property whose rents exceed the monthly expenses, then in 30 years when they\u2019re in their 50s and the mortgage is paid off, and they\u2019ve done the smart thing by raising the rents over the years, they will be sitting on a million-dollar asset that cash flows thousands of dollars per month at the cost of a measly $15k or so out-of-pocket when they were 20-something.I can\u2019t think of any better way for young people with limited resources to prepare for their future so early on in life with so little cash out-of-pocket.FHA Self-Sufficiency RuleOne thing to keep in mind when looking for an FHA owner-occupied triplex or fourplex is that 75%\u00a0of the sum of the market rents on all units (including the one you will be occupying) need to cover your monthly payment (principal, interest, taxes, insurance, and mortgage insurance).This is known as the self-sufficiency rule. It only applies to 3- and 4-unit properties (not SFRs or duplex) bought using FHA financing.There are other FHA requirements,\u00a0but determining whether or not a triplex or fourplex meets the self-sufficiency rule is a good place to start as this rule will immediately eliminate many properties from your search, especially in expensive markets like mine.The fact that the self-sufficiency rule only applies to triplexes and fourplexes in no way means that you cannot purchase a single-family home or duplex using FHA financing.It just means there\u2019s an additional requirement that 3- and 4-unit properties must meet because as these\u00a0are typically larger, more expensive properties with bigger mortgages and bigger monthly payments and hence pose a greater insurance risk to the FHA,\u00a0which, by the way, is a mortgage insurer, not a mortgage lender.As\u00a0FHA\u2019s credit and income requirements are not as strenuous as they are for conventional mortgages, it seeks to\u00a0mitigate its risk of insuring a 96.5% loan-to-value\u00a0mortgage on a larger property\u00a0by making\u00a0sure that\u00a0the rental income is high enough in relation to the mortgage.Want to Learn More?If you’d like to learn more about my personal finance and real estate journey, sign up in the box below to receive updates on new blog posts!"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Fast Money","item":"https:\/\/moneydoneright.com\/fast-money\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Side Hustles","item":"https:\/\/moneydoneright.com\/fast-money\/\/side-hustles\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"How 20-Something Me Bought a Fourplex in L.A. 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