WEBVTT - BA Q&A: This is for My Homies 0:00:16.360 --> 0:00:21.000 It's time for the b a q A the b aqa. Wait, 0:00:21.079 --> 0:00:24.040 what was the bat manby? What's the b the b 0:00:24.160 --> 0:00:24.360 a q? 0:00:24.560 --> 0:00:30.120 So the b a q I'm frozen. I don't know. 0:00:30.240 --> 0:00:31.120 Did we have a beat. 0:00:31.160 --> 0:00:33.120 We did have a kind of vock cadence, like it's 0:00:33.200 --> 0:00:36.560 time for them, it's time give me a bee. Anyway, 0:00:36.640 --> 0:00:39.200 y'all know, it's talk with the BAQA. That's Brown Ambition, 0:00:39.640 --> 0:00:45.680 Question and Answer episode. You guys have the questions and 0:00:45.720 --> 0:00:47.960 we kind of have some answers, although legally we're not 0:00:48.040 --> 0:00:50.239 responsible for anything that you decide to do because you're 0:00:50.240 --> 0:00:53.280 grown and we dump some idea. Yes, we have some ideas. 0:00:53.320 --> 0:00:55.640 That's what we have some ideas, and then you can decide, 0:00:55.640 --> 0:00:58.360 as a grown adult with your own agency, what do 0:00:58.360 --> 0:01:02.040 you want to do. Either way, that's a much longer 0:01:02.200 --> 0:01:06.360 title than baqa, so we just stick with BAQA, all right. 0:01:06.920 --> 0:01:11.360 So we've got two questions that are home related. So 0:01:11.440 --> 0:01:13.200 this is from our homies. Mandy want to. 0:01:13.160 --> 0:01:15.480 Start roll in with the homemides. 0:01:15.959 --> 0:01:18.800 Yeah, I would love to start as professional homeowners ourselves. 0:01:18.880 --> 0:01:21.840 We feel very specially equipped for this, and plus there's 0:01:21.880 --> 0:01:23.759 a lot of talk out there about owning a home 0:01:23.760 --> 0:01:24.039 in this. 0:01:24.040 --> 0:01:25.160 Crazy, crazy market. 0:01:25.240 --> 0:01:25.559 Okay. 0:01:25.720 --> 0:01:29.760 First comes from listener who asks, Hello, my financial girlfriends. 0:01:30.160 --> 0:01:32.680 I love the show. I'm looking to make some upgrades, 0:01:32.840 --> 0:01:35.399 upgrades to our home, but the price tag for all 0:01:35.400 --> 0:01:38.120 the changes I want to make keeps me from moving forward. 0:01:38.520 --> 0:01:41.119 How did you guys go about making renovations to your home? 0:01:41.360 --> 0:01:43.679 Did you set a budget? If so, how did you 0:01:43.720 --> 0:01:46.440 determine the budget? I'm looking for any tips you can share. 0:01:47.200 --> 0:01:49.680 Oh, hey girlfriend, Hey girl, Hey, Hi. 0:01:49.840 --> 0:01:53.280 Well, you and I both had very different renaut situations, 0:01:53.320 --> 0:01:55.720 So what was your approach so well? 0:01:55.760 --> 0:01:57.760 With our kind of situation, we were doing a complete 0:01:57.760 --> 0:02:01.560 gut I'm talking about like new electric plumbing, and so, 0:02:02.120 --> 0:02:07.120 you know, we would look for a contractor to you know, 0:02:07.160 --> 0:02:09.160 who was going to give us like basically a general bid. 0:02:09.680 --> 0:02:11.760 But what I realized first, which was actually really helpful, 0:02:11.840 --> 0:02:16.880 is I actually found a designer first, which actually helped 0:02:16.919 --> 0:02:20.840 because the designer was able to help me really see 0:02:20.880 --> 0:02:22.760 through some of the things I was not thinking about. 0:02:23.000 --> 0:02:25.280 So we kind of created like this like wish list 0:02:25.280 --> 0:02:26.720 of all the things I wanted in the house, and 0:02:26.760 --> 0:02:29.120 so when we met with contractors, she was able to 0:02:29.160 --> 0:02:31.720 be like, so I might be like new plumbing she said, yes, 0:02:31.720 --> 0:02:34.400 but this bathroom has to be resized. So it was 0:02:34.400 --> 0:02:35.800 like these there were things. So if I was going 0:02:35.840 --> 0:02:37.639 to do like a huge, huge project, to me, it's 0:02:37.680 --> 0:02:40.920 worth it to also get some like design consulting, you know, 0:02:41.720 --> 0:02:43.840 on top of that. And so we had like a 0:02:43.880 --> 0:02:45.840 general you know, not a general like we had the 0:02:45.880 --> 0:02:48.600 contract to give us a very detail oriented how much 0:02:48.600 --> 0:02:49.839 it was going to cost. So we bought the house 0:02:49.840 --> 0:02:53.280 from one for one eighty and I believe the proposal 0:02:53.360 --> 0:02:55.440 was for one eighty although we got proposals for like 0:02:55.840 --> 0:03:00.080 sixty ninety thousand, We got proposals for two fifty. And 0:03:00.080 --> 0:03:01.560 so I kind of went with someone in the middle 0:03:02.040 --> 0:03:05.560 because like the high one seemed too high because it's 0:03:05.600 --> 0:03:07.280 like based upon what we needed, and the low one 0:03:07.320 --> 0:03:11.239 was clearly a lie because oftentimes folks will lowball you 0:03:11.320 --> 0:03:12.760 just so they can rise the price leader they're just 0:03:12.760 --> 0:03:14.720 trying to get you in the door. And so we 0:03:14.840 --> 0:03:17.160 chose this guy justin and for the most part he 0:03:17.240 --> 0:03:21.720 was cool. But also having the designer really helped because, 0:03:22.120 --> 0:03:24.400 like I remember the first day, I don't know like 0:03:24.480 --> 0:03:27.480 the size of a half bath when it's framed out, 0:03:27.600 --> 0:03:30.120 meaning it's just the wood, it looks big. So she 0:03:30.200 --> 0:03:33.080 went and was like, oh, heck no, And now she 0:03:33.120 --> 0:03:34.640 pushed it down a few feet. I'm like, it's gonna 0:03:34.639 --> 0:03:36.960 be two bicks. She says, no, Tiffany, you're not understanding 0:03:36.960 --> 0:03:40.800 how many inches you know, the walls and the dry 0:03:40.840 --> 0:03:42.360 wall everything are going to take up. And she was 0:03:42.440 --> 0:03:45.200 right because now the half bath it's like just big enough, 0:03:45.440 --> 0:03:47.160 and it had if it hadn't been smaller, it would 0:03:47.160 --> 0:03:48.840 have been, honestly just like unusable. 0:03:49.440 --> 0:03:52.600 And so that the little tiny one downstairs, yes, the 0:03:52.600 --> 0:03:54.760 little powder room. Girl, when I tell you, if my 0:03:54.880 --> 0:03:56.920 hips were an inch bigger, I would not have made 0:03:56.960 --> 0:03:59.280 it out of that bathroom, okayould I had to come 0:03:59.280 --> 0:04:02.480 with the butter, like I almost had to call for help. 0:04:02.560 --> 0:04:04.360 I was like, yeah, and so. 0:04:04.320 --> 0:04:07.480 He wanted he was gonna make it smaller. She was 0:04:07.520 --> 0:04:10.040 like no, no, no, no, no. So yeah, so you like 0:04:10.080 --> 0:04:12.200 these are things like so for us, we kind of 0:04:12.200 --> 0:04:14.320 had I had it in my mind that one one eighty, 0:04:14.400 --> 0:04:17.560 but then we had a thirty percent reserve, meaning that 0:04:18.040 --> 0:04:19.960 we knew that something might come up, like there was 0:04:20.000 --> 0:04:22.000 a sewage pipe that we didn't anticipate having a move. 0:04:22.040 --> 0:04:24.600 That was ten thousand dollars. There were some other things that, 0:04:24.640 --> 0:04:26.440 like you know, came up, and so I want to say, 0:04:26.440 --> 0:04:29.240 all together, we probably spent two hundred thousand dollars renovating 0:04:29.240 --> 0:04:32.600 the house. So for us, you know, we had saved 0:04:32.839 --> 0:04:36.400 and and budgeted for a number of years before we 0:04:36.440 --> 0:04:39.320 purchased the house and did the renovations. But if there 0:04:39.400 --> 0:04:42.160 was something that we were going to do that was lighter, Honestly, 0:04:42.800 --> 0:04:45.640 one of the things I learned from that renovation was 0:04:45.880 --> 0:04:49.760 my realtor was I mean, my designer was also a realtor. 0:04:49.800 --> 0:04:51.640 She was a my reltor, but she was also a realtor, 0:04:52.200 --> 0:04:55.080 and so she would tell us certain areas of the house, 0:04:55.200 --> 0:04:57.640 like this is where I should splurge, and this is 0:04:57.640 --> 0:05:00.640 where a girl. It's not even that serious based upon 0:05:00.720 --> 0:05:02.200 where I was going to get my money back for 0:05:02.279 --> 0:05:04.400 resell value. So that's, honestly, if I was going to 0:05:04.440 --> 0:05:06.640 do it differently. Now, let's just say I got another house. 0:05:06.680 --> 0:05:09.120 It doesn't need a huge renovation, but I wanted to 0:05:09.160 --> 0:05:12.359 make some changes. I would connect with a realtor to 0:05:12.440 --> 0:05:14.200 kind of get a better understanding of where I was 0:05:14.240 --> 0:05:18.320 going to get my return on investment from and to 0:05:18.440 --> 0:05:20.240 understand how much money I should put into it. She 0:05:20.279 --> 0:05:22.599 was really good. Her name is Rihanna, her business is 0:05:22.600 --> 0:05:25.480 called Remain Home. Her husband is an engineer and a contractor, 0:05:25.760 --> 0:05:28.200 and she's a designer. So they used to walk through 0:05:29.040 --> 0:05:31.360 with us and say, Tiffany, it's worth it to get 0:05:31.400 --> 0:05:33.640 the ACS, but it's honestly not worth it to put 0:05:33.680 --> 0:05:36.320 Marvel in Supergirl's bathroom because that's what I wanted to do. 0:05:36.400 --> 0:05:40.880 She's like, no, girl, she does not need more, you know. 0:05:41.000 --> 0:05:43.360 And then he would sell like Jermaine, her husband would 0:05:43.400 --> 0:05:45.440 be like, you know, this is where you're gonna You'll 0:05:45.440 --> 0:05:47.520 get sixty cents on the dollar back from here, but 0:05:47.560 --> 0:05:49.719 you'll probably get eighty cents on the dollar back from here. 0:05:49.800 --> 0:05:53.240 So partnering with a designer, partnering with a realtor to 0:05:53.240 --> 0:05:54.880 figure out where you're going to get the most bang 0:05:54.960 --> 0:05:56.640 for your buck, it's probably my advice. 0:05:57.000 --> 0:05:59.320 Yeah, that's great, And you did everything kind of all 0:05:59.360 --> 0:06:00.960 at once, right seven months? 0:06:01.000 --> 0:06:01.520 Seven months? 0:06:01.600 --> 0:06:03.960 Yeah. So we did a big renovation when we got 0:06:04.000 --> 0:06:07.839 our house and it was a I can't imagine what 0:06:07.920 --> 0:06:08.600 was our house. 0:06:08.360 --> 0:06:09.640 Before it was a two. 0:06:09.920 --> 0:06:13.520 It was a three bedroom, two, one and a half bath, 0:06:13.520 --> 0:06:15.920 and we turned it into a still a three bedroom, 0:06:15.960 --> 0:06:17.960 but we added a master bath and a master closet 0:06:18.000 --> 0:06:20.080 and all these big things, and flip the kitchen and 0:06:20.200 --> 0:06:22.200 turn that into a put a laundry room in and 0:06:22.240 --> 0:06:24.440 a powder room, et cetera, added in an extra bathroom. 0:06:24.800 --> 0:06:26.200 It was a big deal at the time. It was 0:06:26.240 --> 0:06:28.400 about We were quoted one hundred and ten thousand from 0:06:28.400 --> 0:06:30.920 our contractor, and we were the same way to if 0:06:30.960 --> 0:06:33.359 we had three different bids. My first thing is to 0:06:33.360 --> 0:06:36.159 get three different bids for whatever work you're trying to 0:06:36.160 --> 0:06:36.640 get done. 0:06:36.680 --> 0:06:39.920 It's tedious, it's annoying, they'll flake on you, et cetera. 0:06:40.040 --> 0:06:42.000 But it's really important to get that out of the 0:06:42.040 --> 0:06:44.560 way so that you can tell if they're flaking, they're 0:06:44.560 --> 0:06:46.640 probably gonna flake later, and then you can get a 0:06:46.640 --> 0:06:48.359 good sense of the ranges. And we went with the 0:06:48.400 --> 0:06:51.279 middle estimate from the guy who routinely showed up for 0:06:51.360 --> 0:06:53.920 us one hundred and ten, and he broke that into 0:06:53.920 --> 0:06:57.320 ten payments, so you paid. We were cutting like ten 0:06:57.360 --> 0:06:59.960 eleven thousand dollars checks every time a phase was complete. 0:07:00.600 --> 0:07:02.560 In our case, we had the cash on hand, but 0:07:02.600 --> 0:07:05.000 by the end of the renovation we were down to 0:07:05.320 --> 0:07:07.800 like the last amount of money that I felt comfortable 0:07:07.839 --> 0:07:10.440 spending on the renovation, so we didn't do everything at 0:07:10.440 --> 0:07:14.040 that one time cut too, So that was twenty eighteen 0:07:14.720 --> 0:07:18.600 renovation done. Like early twenty nineteen, we just finally did 0:07:18.840 --> 0:07:20.760 a big project that we've been wanting to do since 0:07:20.760 --> 0:07:22.560 the beginning, but we wanted to wait until we had 0:07:22.600 --> 0:07:25.920 more cash on hand. And that was our backyard, our deck. 0:07:26.280 --> 0:07:27.840 I'm pointing to it like y'all can see. 0:07:27.960 --> 0:07:30.680 But our deck in the backyard. For that, we did 0:07:30.720 --> 0:07:31.320 set a budget. 0:07:31.360 --> 0:07:33.360 I said I didn't want to go over fifteen thousand, 0:07:33.880 --> 0:07:36.040 and that to me, based on my research, was a 0:07:36.080 --> 0:07:38.200 reasonable amount of money. And a couple of my neighbors 0:07:38.240 --> 0:07:41.160 had gotten decks done, and we went ahead and we 0:07:41.200 --> 0:07:43.600 got quotes, and when I had that budget in mind, 0:07:44.240 --> 0:07:47.320 also I also thought about the size of the deck 0:07:47.440 --> 0:07:49.680 and the materials that went into the deck, because it 0:07:49.680 --> 0:07:51.960 can get more expensive depending on do you want stone, 0:07:52.240 --> 0:07:54.720 do you want real wood, do you want composite wood? Da, DA, 0:07:54.960 --> 0:07:58.040 all these different options. So we settled on the budget. 0:07:58.080 --> 0:08:00.920 And then it was like, even if you settle on 0:08:00.920 --> 0:08:03.000 your budget and you'd get the plans approved, they start 0:08:03.000 --> 0:08:05.960 the work, inevitably, they're going to come to you and say, ooh, 0:08:06.000 --> 0:08:08.720 the color brown that you wanted for the deposit is 0:08:08.760 --> 0:08:12.040 just it's delayed because of COVID. So how about these. 0:08:12.080 --> 0:08:14.440 They're priced at thirty percent more than it, but you 0:08:14.440 --> 0:08:17.160 know they're nice. They're available now. And I had to 0:08:17.160 --> 0:08:19.000 stick to my budget and say, you know, we'll wait 0:08:19.680 --> 0:08:22.120 a few more weeks. It'll be fine, you know, And 0:08:23.200 --> 0:08:25.800 that was happening. But we really did manage to stay 0:08:25.840 --> 0:08:30.120 on budget for that fifteen K. We chose to pay 0:08:30.120 --> 0:08:32.200 for it in one lump sum because we had the 0:08:32.240 --> 0:08:35.040 cash on hand. But another tool that I've used when 0:08:35.040 --> 0:08:37.400 we did our HVAC for example, which was part of 0:08:37.440 --> 0:08:41.840 our initial renovation, we replaced all of our steam radiators 0:08:41.840 --> 0:08:44.360 with a central air conditioning unit and we also put 0:08:44.640 --> 0:08:45.640 individual units on the. 0:08:45.679 --> 0:08:46.600 Upstairs, et cetera. 0:08:47.120 --> 0:08:49.440 And for that that was about thirty thousand dollars and 0:08:49.480 --> 0:08:52.840 they offered zero percent financing for eighteen months, and so 0:08:52.960 --> 0:08:56.080 we financed it that way. And I think that that 0:08:56.200 --> 0:08:58.880 gave us one it's the power of having good credit 0:08:58.880 --> 0:09:01.840 because you can qualify for those zero percent financing offers, 0:09:02.280 --> 0:09:05.280 and it gave us additional cash flow because just so 0:09:05.320 --> 0:09:07.680 I could sleep at night having those cash reserves, knowing 0:09:07.720 --> 0:09:10.080 that I didn't have to part with thirty grand right 0:09:10.160 --> 0:09:13.320 up front, and that worked out. But we had to 0:09:13.840 --> 0:09:16.080 I think we yeah, we had. We ended up making 0:09:16.160 --> 0:09:19.840 a pretty big final payment because even with eighteen months 0:09:20.679 --> 0:09:23.600 at the term of the loan and at the monthly 0:09:23.600 --> 0:09:25.760 payment that we were paying, we were not going to 0:09:25.880 --> 0:09:27.719 fully pay out the loan in eighteen months the way 0:09:27.760 --> 0:09:30.040 that it was written, and had we left even one 0:09:30.120 --> 0:09:34.040 cent on that loan, there was a third interest clause. Yeah, yeah, 0:09:34.080 --> 0:09:36.000 there was a well, there was a deferred interest clause, 0:09:36.000 --> 0:09:38.199 which means they would have pretended as if we had 0:09:38.240 --> 0:09:40.160 not been that they would have gone back to the 0:09:40.240 --> 0:09:43.439 beginning of the thirty grand and applied interest to the loan, 0:09:43.880 --> 0:09:45.960 which could have made it over forty grand. You know. 0:09:46.120 --> 0:09:48.960 So I put my gall my calendar alert, and I 0:09:49.040 --> 0:09:50.680 was like, you need to pay that off, you know, 0:09:51.160 --> 0:09:55.320 seventeen months, not eighteen months. So that's that's definitely a 0:09:55.320 --> 0:09:58.440 word of caution. But zero percent financing plans if you 0:09:58.480 --> 0:10:01.439 got them, and they and a lot of established contractors 0:10:01.559 --> 0:10:04.680 or businesses that do home remodeling, they will offer that, 0:10:04.880 --> 0:10:07.240 so read the fine print if you have good credit. 0:10:07.280 --> 0:10:10.360 I think that that's an option. Another option is a 0:10:10.440 --> 0:10:13.160 home equity loan, so a lot of and this was 0:10:13.360 --> 0:10:16.040 wildly popular in the pandemic. You saw a lot of 0:10:16.400 --> 0:10:19.440 homeowners because home prices were just going up everywhere, right, 0:10:19.880 --> 0:10:22.400 and suddenly you had a lot more equity in your 0:10:22.400 --> 0:10:25.440 home that you could leverage. And just to kind of 0:10:25.440 --> 0:10:27.160 back it up, when you have equity in your home, 0:10:27.200 --> 0:10:29.440 it's it's how much your home is worth minus how 0:10:29.520 --> 0:10:32.360 much loan you still owe on it. So if you 0:10:32.360 --> 0:10:34.920 have a five hundred thousand dollars house, you only owe 0:10:34.920 --> 0:10:37.319 one hundred grand on it, and it's worth today five 0:10:37.400 --> 0:10:40.280 hundred thousand, then you have four hundred thousand dollars in equity. 0:10:40.559 --> 0:10:43.480 And banks will often loan you money through a home 0:10:43.520 --> 0:10:47.400 equity loan up to like eighty ninety percent of that equity. 0:10:47.720 --> 0:10:49.920 So if you have four hundred thousand dollars of equity, 0:10:50.200 --> 0:10:53.520 suddenly you've got if you want, four hundred thousand dollars 0:10:53.520 --> 0:10:56.000 worth of you know, money that you could get out 0:10:56.000 --> 0:10:59.200 in the loan and then use that loan to pay 0:10:59.240 --> 0:11:02.600 for remodels or repairs or whatnot. That's an extreme example, 0:11:03.280 --> 0:11:06.280 but home equity loans tend to be a more a 0:11:06.320 --> 0:11:09.360 low rate option, a low rate alternative. When it comes 0:11:09.360 --> 0:11:12.920 to taking on debt to pay for a home expense 0:11:13.000 --> 0:11:16.320 or home remodel, then say a credit card or a 0:11:16.320 --> 0:11:19.120 personal loan. But there's a key reason why they're cheaper 0:11:19.440 --> 0:11:21.200 because they're like girls will take us house. 0:11:21.520 --> 0:11:22.880 We will take us a house. 0:11:23.760 --> 0:11:27.480 Yes, okay, so it's secured by your home, that is 0:11:27.520 --> 0:11:30.200 the collateral. So keep that in mind. You have to, 0:11:30.280 --> 0:11:32.400 you know, pay it back or you will be homeless 0:11:32.760 --> 0:11:34.760 with a really nice bathroom that you can't use anymore. 0:11:34.880 --> 0:11:39.439 Exactly. So all so, all in, I'll try your best 0:11:39.440 --> 0:11:43.120 to create a list, you know, connect with the realtor 0:11:43.160 --> 0:11:45.079 to see like where your money is going to be 0:11:45.080 --> 0:11:49.400 best maximized, and budget for project by project until you 0:11:49.440 --> 0:11:50.280 can get the things done that. 0:11:50.280 --> 0:11:52.480 You want project by project. 0:11:52.480 --> 0:11:53.080 Take your time. 0:11:53.320 --> 0:11:55.080 Yes, there will always be more stuff to do. 0:11:55.200 --> 0:11:56.760 It never ends, never. 0:11:56.679 --> 0:12:02.000 Does, because you'll always want to renovate. I'm telling you, 0:12:07.520 --> 0:12:15.480 all right, yeah, all right, our next question, I don't 0:12:15.520 --> 0:12:19.160 think this person what they said. I see hashtag prideful plug, 0:12:19.360 --> 0:12:21.560 so we'll just call you pride for blug. Okay. I 0:12:21.600 --> 0:12:24.200 recently attended a first time home buyer seminar Good for you, 0:12:24.360 --> 0:12:28.520 and the speaker spoke about and emphasized on FA ch loans. 0:12:28.960 --> 0:12:30.760 I spoke to her one on one about my home 0:12:30.760 --> 0:12:33.000 purchasing plan, and she mentioned using this type of loan 0:12:33.040 --> 0:12:36.000 for an investment property, then purchasing the home of my dreams, 0:12:36.000 --> 0:12:39.439 my personal home. Afterwards, she mentioned that purchasing my personal 0:12:39.480 --> 0:12:42.880 home first then an investment property would be more difficult 0:12:43.480 --> 0:12:47.120 and expensive. My plgunda Spanish for those of you who 0:12:47.160 --> 0:12:49.920 don't speak it for both of you, is should I 0:12:49.960 --> 0:12:52.760 purchase an investment property as my first home so I 0:12:52.760 --> 0:12:55.600 can take advantage of the low down payment of an 0:12:55.679 --> 0:12:58.439 fa ch loan. Here was my plan before attending the 0:12:58.480 --> 0:13:01.680 seminar and my financial profile, single in my early thirties, 0:13:01.720 --> 0:13:05.280 no kids, credit score is seven to twenty, salary one 0:13:05.360 --> 0:13:08.200 hundred and forty K. Wants to purchase personal home in 0:13:08.240 --> 0:13:12.000 two years in twenty twenty three or twenty four currently 0:13:12.000 --> 0:13:15.120 saving for down payment for a conventional loan, purchase an 0:13:15.160 --> 0:13:18.320 investment property two to three years after purchasing personal home, 0:13:19.040 --> 0:13:22.240 paying down twenty K of debt which will be used, 0:13:22.520 --> 0:13:25.079 which will be paid off by beginning of twenty twenty two. 0:13:25.679 --> 0:13:27.280 All this is acuse she's a go purchase, get it 0:13:27.360 --> 0:13:29.520 with money and Rea chapter four, So you can learn 0:13:29.559 --> 0:13:32.839 more about y'all. More about this y'all powerful plug. Thank you, 0:13:33.120 --> 0:13:36.440 thank you girl. So this is very interesting. So if 0:13:36.440 --> 0:13:39.440 I'm going to recap it of the recap. So she's like, 0:13:39.480 --> 0:13:42.200 I want to get two homes, one for investment, one 0:13:42.240 --> 0:13:45.360 for like, you know, my dream home. Right now, she's single, 0:13:45.440 --> 0:13:48.040 ready to mingle. She makes great money. Credit score is decent, 0:13:48.040 --> 0:13:49.719 although I'll say, sis, wait until you get to a 0:13:49.720 --> 0:13:52.199 seven fifty, just so we're clear, that's the beginning of 0:13:52.200 --> 0:13:54.000 perfect credit. You will get the best interest rate of 0:13:54.040 --> 0:13:56.920 that loan. Went to a home buyers course. They emphasize 0:13:56.920 --> 0:13:59.240 that FAHA loans might be the way to go, especially 0:13:59.280 --> 0:14:01.840 with your first home. And you're trying to figure out, 0:14:01.920 --> 0:14:05.440 so do I do my ideal property like my personal 0:14:05.520 --> 0:14:07.679 home first or do I do an investment property first? 0:14:07.840 --> 0:14:09.839 So Mandred, can do you want to like explain to 0:14:09.840 --> 0:14:12.960 the people, like what an FAHA loan is? And can 0:14:13.000 --> 0:14:16.600 you even use an FHA loan for an investment property? 0:14:16.720 --> 0:14:21.040 Cliff note, No, but can you share it? 0:14:21.080 --> 0:14:21.720 Wait as you can? 0:14:22.200 --> 0:14:25.480 Okay, in a way an fah loan, Yeah, yeah, and 0:14:25.680 --> 0:14:29.040 fah loan is like the first time home buyer's loan 0:14:29.360 --> 0:14:31.360 in America. If you're a first time home buyer, it 0:14:31.440 --> 0:14:34.440 allows you to get a home for a low down payment. 0:14:34.480 --> 0:14:37.280 I think it's three point five or five percent, depending 0:14:37.280 --> 0:14:40.080 on credit score and things like that. So it is 0:14:40.120 --> 0:14:43.040 a very it's it's definitely an option, especially for a 0:14:43.040 --> 0:14:45.480 first time homeowners. Sometimes I wonder why we didn't just 0:14:45.560 --> 0:14:48.440 do this, because you know, we we scraped our little 0:14:48.440 --> 0:14:51.480 coins together to put down I think fifteen percent, just 0:14:51.480 --> 0:14:53.080 because I had it in my mind that I. 0:14:53.000 --> 0:14:54.880 Needed a big down payment. That's the right way to 0:14:54.920 --> 0:14:55.240 do it. 0:14:55.520 --> 0:14:57.320 But you know, that left us with less cash on 0:14:57.360 --> 0:15:00.560 hand for the renovation. But kindsight twenty twenty. So that's 0:15:00.600 --> 0:15:03.200 a huge benefit of the FAHA is that you do 0:15:03.240 --> 0:15:05.560 not have to have such a large down payment, which 0:15:05.600 --> 0:15:08.640 makes it more accessible for first time home buyers such 0:15:08.680 --> 0:15:13.600 as yourself. Here in her question, she talks about wanting 0:15:13.640 --> 0:15:16.680 a personal home first. She says she's currently saving for 0:15:16.720 --> 0:15:20.040 a down payment, and she wants to buy that home 0:15:20.080 --> 0:15:23.480 in the next two years and then an investment property 0:15:23.520 --> 0:15:25.960 two to three years later, and she's wondering could she 0:15:26.040 --> 0:15:28.320 use an FAHA loan. I suppose for both of these, 0:15:28.880 --> 0:15:32.360 So you can definitely buy home your primary residence with 0:15:32.400 --> 0:15:36.200 an FAHA loan. As far as investment properties go, it's 0:15:36.240 --> 0:15:40.080 going to be a yes, but yes, but yes, but yes. 0:15:40.120 --> 0:15:43.640 You can use an FHA loan to purchase an investment property, 0:15:43.760 --> 0:15:46.880 but there are some quid pro quos. You need to 0:15:46.920 --> 0:15:49.120 actually live in that home and call it your primary 0:15:49.160 --> 0:15:52.000 residence for at least a year, and you have to 0:15:52.000 --> 0:15:54.240 move into the home within sixty days after closing on 0:15:54.280 --> 0:15:56.760 the mortgage. On Tiffany, when we were kind of reading 0:15:56.760 --> 0:16:00.120 this before, you mentioned you could also maybe even and 0:16:00.240 --> 0:16:02.480 use you know, and to kind of get at both 0:16:02.520 --> 0:16:05.040 things at once. Get an investment property but also a 0:16:05.080 --> 0:16:09.400 primary residence. Is purchasing a multi family home yep, with 0:16:09.440 --> 0:16:10.400 an FAHA loan. 0:16:10.640 --> 0:16:13.800 Yeah, Well, let's be I want to be really clear 0:16:13.840 --> 0:16:16.760 on the language, because we might we're saying investment property 0:16:16.800 --> 0:16:20.560 because we're talking about it as like almost like lightly 0:16:20.760 --> 0:16:23.200 like if you go to FAHA and say I would 0:16:23.200 --> 0:16:24.880 like a loan for this investment property, they're going to 0:16:24.920 --> 0:16:29.520 say no because it has to be technically what they 0:16:29.560 --> 0:16:33.680 consider your primary residence, which means that you're going to, 0:16:34.040 --> 0:16:36.240 like Mada said, move in here after sixty days and 0:16:36.320 --> 0:16:39.960 live here for a year. Now on internally, you could 0:16:39.960 --> 0:16:43.280 say this is an investment you know, so meaning that 0:16:43.280 --> 0:16:45.800 you might exactly meaning that you can say, you know what, 0:16:45.840 --> 0:16:48.040 I'm going to get a multi family house, so of 0:16:48.040 --> 0:16:49.840 course you can't live in every single one up to 0:16:49.920 --> 0:16:52.680 four four family you can't live in four families, So 0:16:52.720 --> 0:16:55.160 you can live in one and you can rent out 0:16:55.240 --> 0:16:58.480 the other three. But they because you live there, they 0:16:58.520 --> 0:17:01.240 won't technically consider it and an investment property. Like if 0:17:01.240 --> 0:17:03.600 you live here, this is your primary residence, and as 0:17:03.600 --> 0:17:05.560 long as you live there for a year, you can 0:17:05.640 --> 0:17:08.040 keep the benefits of the fah loan and also just 0:17:08.119 --> 0:17:11.919 keep that in mind. So your homever was not incorrect, 0:17:11.960 --> 0:17:13.600 but you would just want to be mindful because fah 0:17:13.760 --> 0:17:17.119 loans cannot be used to finance a second home, a 0:17:17.160 --> 0:17:22.240 rental home, a vacation home, or the technical term for 0:17:22.320 --> 0:17:25.040 an investment property, meaning you're not living here, You're just 0:17:25.320 --> 0:17:27.719 you're using this property just for the sole purpose of 0:17:27.720 --> 0:17:31.119 making money. So what I would do is and this 0:17:31.160 --> 0:17:32.840 is what a lot of people you know will truly 0:17:32.880 --> 0:17:35.320 suggest to you that if you are considering, you know, 0:17:35.440 --> 0:17:38.240 getting investment property or you know, wanting to make money 0:17:38.280 --> 0:17:40.720 off of a home. You know that you're going to 0:17:40.720 --> 0:17:46.359 purchase that that first property should be your quote unquote 0:17:46.359 --> 0:17:49.800 primary residence at least for a year faha, multi family 0:17:50.000 --> 0:17:52.280 live there for a year. Then what you do? They 0:17:52.320 --> 0:17:54.800 call it house hacking. And this is when when we 0:17:54.840 --> 0:17:58.240 had who are those that amazing couple, Amon and Christina 0:17:58.840 --> 0:18:01.600 are Rich Journey Yes, I know, I always love their name, 0:18:01.640 --> 0:18:05.760 but they say them everything. So so they did house 0:18:05.760 --> 0:18:07.800 hacking house. And there's also this woman named ken Jah 0:18:07.840 --> 0:18:09.840 Barnes that I always partner with that she teaches people 0:18:09.880 --> 0:18:13.080 how to house hack. So house hacking is just when 0:18:13.080 --> 0:18:15.160 you live in a place, you let someone else pay 0:18:15.160 --> 0:18:16.480 for that place and then you can move on to 0:18:16.520 --> 0:18:19.399 another place as a result. And so then I would 0:18:19.440 --> 0:18:22.520 you know, continue like after that year, you know, you 0:18:22.600 --> 0:18:25.000 get to keep all the benefits for your fah loan 0:18:25.600 --> 0:18:28.800 and then you get your primary residence a new primary residence. 0:18:28.840 --> 0:18:31.520 And that's what I would do, honestly, I would. I 0:18:31.560 --> 0:18:34.000 would do that, you know like it' and it's it 0:18:34.000 --> 0:18:36.359 would be worth it to wait your thirty sis, you 0:18:36.400 --> 0:18:39.040 are young, young and younger. 0:18:38.920 --> 0:18:41.879 So yeah, I love I love a lady with a 0:18:41.880 --> 0:18:44.360 five year plan though, shout out to you five year 0:18:44.400 --> 0:18:45.960 plan in a seven hundred credit score. 0:18:46.040 --> 0:18:48.879 Noki, Yes, but definitely wait till you get that seven fitty. 0:18:49.240 --> 0:18:51.679 Here's why seven fifty is the beginning of perfect credit, 0:18:52.119 --> 0:18:54.560 meaning they can't deny you the best interest rate that 0:18:54.560 --> 0:18:56.240