First primary residence and other newbie q's

Hi everyone,
I just found this forum about a week or two ago and have been pouring over a ton of the old threads. It’s a great place, theres so much info to digest! Anyway I’m hoping some of you can help me out. I’ve been studying for a bit now and am hoping to get started soon. I’m in no hurry to do a deal just to do one, but want to get serious about starting the process of finding deals. The very first thing I would like to find is a primary residence. This would be my first home purchase. I’m hoping to find something from a duplex to a 4-plex that needs some rehab and move into one of the rooms and rent out the rest hoping that if everything works out the mortgage would be paid out by the tenants. One of the problems is that I live in the bay area and prices here are pretty crazy so it would have to be a really good deal to make everything work. Another thing is that I will be self employed so I wont have any proof of income and I’m also pretty young so I have decent credit but nothing spectacular. Would I be able to get an FHA loan for something like this? I havent searched too deeply on FHA loans so I dont know if you can only buy SFH’s or anything else with it. Do you guys think this is possible or am I just dreaming? Also, I’ve always wondered when you do pick up a rehab project and get the loans and everything, how does the timing of the repayment work? Do you have to start repaying the loans right away, have a certain time limit, or until the repairs are finished? Sorry if everything’s confusing and/or random. Just have so many things to learn and dont know where to start. Any advice about anything mentioned would be greatly appreciated. Thanks!

Start by going to a mortgage broker and finding out how much $ you qualify for.

Money is the bullets in your gun in the world of real estate. Find out whether you can hunt birds or bear.

Welcome sfbayrei!

Steve is right. Start your process by finding out what you can qualify for. Then develop your plan from there. Lack of preparation, as I am sure you have read, is the biggest reason for failure.

Plan your work then work your plan.

Good luck! 8)

you have a real uphill battle to find something that make sense in the bay area. most of metro Calif is cash flow negative (even on a per unit basis). The point is even if you buy a duplex, the rent will not cover 1/2 of the mortgage, tax, insurance, etc.

However, take a look around in some neighborhoods that are lower than you might initial think you would want to live. Many times, those areas can be block-block dependant in terms of quality vs price.(i.e. one block has some pride of ownership and two blocks over is run down rentals; all in the same zip code/neighoborhood).

It will require patient and do the research, but it can work. You might have to look at 20-50 properties (or more) However, first step is talk to a lender/mortgage broker.

Good luck

Thanks for the welcome. I know its going to be real hard finding a decent place around here but I am up to the challenge and can devote alot of time to it too. I’m pretty sure I wont be able to find anything the conventional way but will hit up the broker to see what I would qualify for even though I’m pretty sure its nowhere near what I would need. Hell of a place to try to start out.

While you are looking for property, take the time and expend the effort to improve your credit in any way you can! “Stated income” loans are readily available, and are based more on your payment history, than your documented income level. Many self-employed people, myself included, use these loans regularly. As suggested above, a GOOD mortgage broker will be able to give you a snapshot of how much you can qualify for based on your current FICO (Fair, Isaac & Co.) score. A few opinions might be a good idea as some mortgage brokers are more creative than others. Keep in mind that anticipated rents will represent income in the final loan “picture” - sometimes overlooked by mortgage brokers!

You might want to do a search in your area for 1st time homebuyer programs. I’m in San Diego and there are numerous programs available - your mortgage broker may not be aware of these. Google: first time home buyer - your city, county, etc.

IMO, the duplex/4-plex is a great idea. Because you will be using this property as your primary residence, the “cash flow” concerns are somewhat irrelevant. You are receiving the benefit of living in the property - an added value above and beyond the returns of most investment property. Also, most people in the early years of home ownership pay more for their mortgage than what the home would return in rent.

Keep sticking your toe in the crack and sooner or later the door will come open! Your challenges, created by living in the bay area, will pay-off when BIG TIME when your long term ownership nets you the appreciation that you can expect!

Good luck!


I’ve actually started looking at first time home buyer programs a while back and there are some that I’m going to try for. Ones that will give you a lower rate and ones that help out with the down payment. My payment history has been pretty much perfect so I will look up the stated income loans too. My biggest problem would be to qualify for a loan big enough to cover the prices around here. I’m not worried about cash flow and everything because I will be living in one of the units and with a tenant or two it would be like paying rent except you’re getting the benefits yourself instead of, someone else. Guess I’ll have a better idea when I go talk to the mortgage broker like everyones suggested. Just need to find one first.

Also, can somebody answer the second part of my post? When you get a loan, does the repayment start immediately or is there some waiting period before you have to repay? THe only loan I’ve ever taken were student loans and there was a pretty long period before you had to repay.

I am not aware of a real estate loan product that does not require payments to begin immediately.

Just imagine the state our economy would be in if we treated mortgages like student loans! Scary!


I agree with the above posts. Shop around, mortgage brokers are all different. Some charge MUCH more than others. You will have the advantage of being an owner occupied property, which will get you better mortgage options.

After getting your financing lined up, your next challenge will be in finding a good Realtor who understands investment real estate. Investment real estate is much different than residential real estate. The average Realtor is clueless in meeting the needs of investors. This a major player in your “dream team”, those who will support your investment goals.

And finally, your criteria for your property is critical to your success. Look for bank owned properties (REOs), and properties in default for a possible short sale. You make your money going in by buying undervalued properties. Appreciation is always a factor, but cannot be the only determing factor. Buy right.


When shopping for mortgage broker, take your credit report with you. DO NOT let them keep running credit reports. It lowers your FICO score.


When shopping for mortgage broker, take your credit report with you. DO NOT let them keep running credit reports. It lowers your FICO score

Good point Jan. However, keep in mind that the scores that you obtain as a consumer are usually not the same as those pulled by a credit company. Consumer reports are generally higher.

Haha well I didnt expect a 6 month wait or anything but havent had a real loan before so dont know how the repayment works. What happens if you do get financing on a rehab and it takes like two months to fix up? During that time you wouldnt be able to have renters so would it have to come out of your own pocket, or should this already be factored into your total cost of the project?

Thanks for the tip about bringing the credit report with you. Would they let me get a copy of the credit report they run? That way I would be able to bring that along as well.

Sorry, wasn’t intending to be a smart a**. You mentioned student loans so I was not sure what your perspective might be. You do need to factor loan payments into the cost of the deal and of course have pockets deep enough to cover it.