How To Invest In Real Estate With JUST $5000 | HOW FHA LOAN WORKS

This video shows you how to start investing in real estate with an FHA loan and only $5000!
Chandler David Smith has been investing in real estate for the last seven years. He currently owns 99 units of rental real estate and loves helping others learn how to create a passive income through real estate investing. In this video Chandler explains how the numbers work for an FHA loan. He shows you how to calculate upfront MIP and MIP that you have to pay on a monthly basis. He explains why a lot of people will tell you not to do an FHA loan but then he dives into the advantages that come with investing early. He shows you the exact duplex you should look for and explains how this specific duplex could give you a 30% or even 50% return on your initial investment. This video was created to help the first time investor get into real estate investing with only $5000 down! After watching this video you will no longer be worried about all of the negatives that people bring up when referring to an FHA loan or putting a lower down payment on your first investment property.
#FHALoan #MIP #howtoinvest5000
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[@ChandlerDavidSmith]

What do you think? Is it worth using an FHA loan?

[@enochchejieh4432]

Hey Chandler If you could invest in real estate in any other country apart from america where would it be and why?

[@InvestwithRavi]

@@enochchejieh4432 Where-ever the numbers would work. I think you should look for: Income to grow 30% in past 20 years, Home values to have increased 40% in past 20 years, and population growth of 20% in past 20 years .... with that said then run your Cash on cash, and cap rate and does it meet min 1% rule ... Other than those fundamentals i mentioned - invest any country you can legally invest in and want to live in ;)

[@Vid_Master]

One time I farted so loudly that my neighbors called the police

[@muntatharalwatan2082]

URGENT PLEASE READ AND COMMENT About the rental cal app I did my own calculation and the app is way off I put 125k for purchase price 25 % down 30 years to pay off 8 % vacancy 8% maintenance 4 % interest rate The out come was not operating income 12,188.16 which is right And cash flow is 6,817 But debt service is 5,370.92 That's where I'm concerned because doesnt that mean my mortgage payment every month 447.50 and not to mention the 8 % vacancy and 8 % maintenance so it leaves less then 447.50 for the mortgage payment which is way off in the real world I used 125k as a purchase price to give my self an example when I realized what I just explained I'm sure because my friend just baught a house for that price and his mortgage is 900 a month So when I do my own calculations if I have 900 mortgage payment on 125k house with 8 % vacancy and 8 % maintenance and 25% down 30 years to pay off 4 % interest rate I would be left of with a negative return on investment If I'm doing something wrong please let me no I would highly appreciate it thank you

[@jalabi99]

It's definitely worth using the FHA or the VA loans to buy your first investment property especially if you can get a fourplex. It's what I tell all my friends to look into doing. If you can get first time homebuyers assistance or down payment assistance it's even better.

[@seanlovesrealestate]

This is a great way for investors to get started if they live in an area where they can buy a multifamily property using an FHA loan. One thing to note is the FHA loan limits increase as the number of units increases (up to $1,472,550 for 4 units). This allows someone in an expensive market like the Bay Area to buy a fourplex for up to $1,525,958 with only $53,408 down!

[@ChandlerDavidSmith]

Great info

[@tcs9998]

Do you make any cash flow with a 4 flex in SF area with 53K down? I am curious

[@seanlovesrealestate]

@@tcs9998 It depends on where you buy it and how much you can charge for the rent. In San Jose, each unit can rent for $2,500 - $3,500/ month. Your mortgage (without the PMI) is going to be around $7,000/ month, total PITI will be around $8,500/month. Not gonna lie, you're probably NOT going to be a cash flowing king from one fourplex, but this strategy allows you to acquire a property in the Bay Area and potentially live in it for zero to low costs! The whole time, you're getting your mortgage paid down and your property is appreciating. It's a pretty legit strategy for someone who wants to own property in the Bay Area.

[@Real.Estate.Report]

Doesn't need to be a multifamily... you can buy a SFR with an FHA loan and rent it out later as well. Or bring in roommates to help offset the mortgage. I know not as ideal as a fourplex, but necessary a approach in some markets.

[@seanlovesrealestate]

@@Real.Estate.Report Yes! But there are two advantages to purchasing a fourplex with an FHA loan. The first is that the loan limit increases as the number of units increases. The second is that you can use 75% of the rents to help you qualify for the loan (helping you lower your DTI). It's very unlikely that a lender will consider house hacking rents towards your income when you're purchasing the property.

[@Real.Estate.Report]

I bought my first house for $179,000 with an FHA loan, and put about $9,000 down in total, including closing costs. Yes I think it is worth using an FHA loan! I sold that house 5 years later and walked away with over $100,000! No exageration!

[@rockyt.7251]

Scott, what was the process like? You contacted FHA? Spoke to someone there? What was your credit score? I’m interested, but don’t know the steps... Thanks for your time!

[@roxannescott6956]

👏👏👏👏

[@MCrelationz]

Answer Ali back Scott don't just disappear on us

[@matthines4748]

My brother did this to buy his house. He got an FHA loan, and his broker even kicked in part of her intended commission as the down payment. He has a mid 700 credit score and got a good interest rate.

[@ChandlerDavidSmith]

Sweet!!

[@Real.Estate.Report]

That's awesome!

[@muntatharalwatan2082]

URGENT ABOUT THE CAL APP U MADE I did my own calculation and the app is way off I put 125k for purchase price 25 % down 30 years to pay off 8 % vacancy 8% maintenance 4 % interest rate The out come was not operating income 12,188.16 which is right And cash flow is 6,817 But debt service is 5,370.92 That's where I'm concerned because doesnt that mean my mortgage payment every month 447.50 and not to mention the 8 % vacancy and 8 % maintenance so it leaves less then 447.50 for the mortgage payment which is way off in the real world I used 125k as a purchase price to give my self an example when I realized what I just explained I'm sure because my friend just baught a house for that price and his mortgage is 900 a month So when I do my own calculations if I have 900 mortgage payment on 125k house with 8 % vacancy and 8 % maintenance and 25% down 30 years to pay off 4 % interest rate I would be left of with a negative return on investment If I'm doing something wrong please let me no I would highly appreciate it thank you

[@greaterishe7197]

Good news!

[@shannonbartelmie3117]

Please do a video on how to deal with tenants who think they call the shots and are difficult. I saw your eviction video which was helpful, but not exactly my situation. Just tenants who complain and argue over things which don't need to be argued about. I am a 21 year old landlord and they seem to think they can take advantage of me, due to my young age. I am doing my responsibilities and due diligence as the landlord and nothing seems to be good enough for them. They have gotten all reasonable requests sufficed, I answer in a timely response, etc. I hear from these tenants every week about some kind of petty complaint for a freshly remodeled and nice home. I guess the one thing I can take from this is people can look great on paper with amazing background checks and credit scores but you never know who you are dealing with.

[@SydneyScream]

Get a management company hun

[@jeremyconrad9183]

his video would be 30 seconds long 25 of it being his intro and outro and 5 other seconds that say "get a management company"

[@eloycubero5961]

Gotta grow some balls and put yo foot down

[@JackDuffley]

House hacking is how I got started a couple years ago. It's incredible for reducing your net housing costs. Now I'm preparing to close on my first stand alone rental property with the cash I've been able to save!

[@TheLynLyn57]

Thank you for the motivation!

[@JackDuffley]

@@TheLynLyn57 right on! Aiming for rental number 2 by the end of the summer :D

[@offlong]

@@JackDuffley did u bought under ur name or llc?

[@JackDuffley]

@@offlong my house-hack is in my name (since you get the best financing terms as an owner-occupant), and my rental was bought directly under an LLC.

[@offlong]

@@JackDuffley ok thx

[@nirankovit3608]

Thanks Chandler, You are the king!!! Since I got to know about Rogan Colbert from your channel I have been earning huge wow!!

[@leduong5459]

I rather invest money and make profit within a period of time than just save money in the bank

[@derekrodney2932]

Men like Mr rogan colbert are rare. I pray God Blesses him for his good works in helping people earn from the foreign exchange market

[@laurenmoore8718]

Expert guidance is very important and highly recommended while trading forex, you need someone to guide your steps so you don't make newbie mistakes

[@marielalunny9773]

How can I reach out to Mr Rogan Colbert I'm really interested and I want to earn huge too

[@nirankovit3608]

@@marielalunny9773 Roganfelixcolbert @ g m a i l . c o m

[@hustlindaddiy5194]

I’m about halfway through chandler’s course and it is pure gold. Everyone who follows him on KZbin should consider it.

[@claytonallemanallthingsfin5325]

I went FHA on my last 4 plex, so worth it, making over 50% return on $15,000 invested.

[@Xkea1]

I'm 20 years old , I started trading stocks when I was 16 and thought if I had more assets o could set a better source of income the. Working , I'm trying to get into real estate but their a number of logistics that your video has hep with . In short ty for giving me a good financial education 👏👏

[@Toby_Gomez]

BOUGHT MY 4 plex at age 21 with FHA loan! Been making videos about it! Thanks Chandler your the man!

[@moonbentley7412]

Subbed

[@razaqzaidi1988]

Hello Chandler, I really enjoy your videos and the advices you give your subscribers. However, I hope you make a video about DTI and how no matter how much you have saved up, it will ultimately be up to your DTI that will determine how much or if you will even get a mortgage. Please make a video on this explaining not only DTI but how to lower it so someone can get a loan. Thanks

[@pyrochickhop8339]

remember that another option is called owner-financing or lease option. Some owners paid off their house long ago and would be willing to carry the mortgage. The interest rate will usually be higher, but sometimes they will negotiate a low down payment or be flexible in other ways. STILL, if you don't have control over your finances, your spending will always be on stuff that loses value instead of building wealth.

[@HildaRealtor]

Depends on the market. If it is a hot market, sellers won’t even consider FHA loan. With 140k purchase price, commission is 4k tops, not enough for agents to help you with the closing coast.

[@Think44]

What are your thoughts on renting out a co-op assuming the co-op board allows it?

[@treasuretakara6072]

Can u use my retirement money as down payment for an FHA loan

[@tyjameson7404]

Great vlog 👍🏼👏🙌🏼🔥thanks Chandler!! This is a proven low overhead tactic into becoming a first time investor/landlord👍🏼This is exactly how I started, and I have no regrets at doing it exactly as you modeled for your viewers ❤️👏💵outstanding presentation and thank you so much for your CDS calculator 💣it’s the bomb !!

[@geraldonanohernandez6411]

Hello Chandler, have you invested in Puerto Rico? I know to buy a vacation home or airbnb type home is a bit different than main land. I am looking to investing in the island and any expertise you may have would be greatly appreciated.

[@JB-xs3wu]

Hey dude, could you make a video specifically talking about the VA loan ?

[@armyfazer1410]

It's the same principles but with zero down and no PMI!

[@keantaesworld9076]

Hey can you make a video on strategies for advertising your rental property

[@Dezmond_Roman]

What is the process of getting tenants into a property. What paperwork will I need in order for the tenant to agree on terms? What sorts of paperwork will I need if I want to manage it myself for the first year?

[@pyrochickhop8339]

An important key to this strategy is to *make sure* that the property is in good condition. My husband and I screwed up royally on our very first house by trusting "friends," and not getting a home inspection. It's worth the few hundred dollars to make sure one of your biggest investments isn't a huge money pit!

[@DannyStorm]

It’s hard here in Los Angeles :/

[@CODVirtuosity]

What are respectable numbers for a single family home? Duplexes in my area are hard to come by.

[@ForeverknightGaming]

That house di not look like a duplex, it looked like it was an 800sqft house.

[@banaya6973]

Chandler. I live in California. How does it work for a property in california? And is the risk worth it to purchase out of state?

[@DotcomJoe]

THANK YOU FOR THE VIDEO!!!

[@brandondehart3962]

Good luck buying a house with an fha loan I've been trying for months now every seller is getting cash offers

[@benycool10]

If you used a FHA on this property less than 6 months ago. why are you not living there?

[@ChandlerDavidSmith]

I didn’t, I bought this property with 25% down. In the video I was just saying that I bought it in the last six months at the deal that I bought it at. Not with the loan I was referring to

[@Zach_breen]

Don’t think it’s still possible to put 5000 anymore

[@parthsoni1433]

I was about to buy a $125000 condo and went to the bank but to fulfill all the process charges me a lot service fees around $10k

[@lamborghiniking730]

This probably sounds stupid but I was wondering if I made enough money could I buy a rental house when I am under 18. It does sound dumb but it is posable to make that money under 18.

[@cathytrull2123]

I am so confused, you are saying where to plug in the numbers

[@Mustangb0y]

Where did you buy that property I mean in which state ?

[@zacharyjohnson2154]

Just did this with a 150000 duplex only issue if trying to figure the rent

[@deadcell1]

If all I had was $5,000 I wouldn't be trying to buy a rental property. There are a lot of things that can go wrong and if you don't have the capital to cover you are screwed.

[@RE-jb2ke]

Would be interesting to see a video on why making your own duplex from a single family may/may not be a good idea.

[@neeloferkhan6423]

Can a Canadian citizen with a us llc get a five percent down with fha loan? Also loans with fennie or freddie as well?

[@wdavis]

Wouldn’t a conventional loan be better in this scenario? Lower Mortgage insurance and lower down payment, isn’t that better?

[@ChandlerDavidSmith]

If you have the money, of course. But if you don’t it’s always better to get into real estate if you find a deal like this rather than pass on it and wait until you have more funding

[@wdavis]

Ive been thinking about this for a while now and as a first time home buyer I would be able to get the 3% down payment with a conventional loan with the lower PMI cuz I have great credit, rent the extra rooms in the house while I live there for a year and then claim it as an investment property after 12 months. You being an experienced investor, is this something that would be beneficial in the long term. With the low down payment and high mortgage the cash flow will be severely impacted, so I was wondering if it’s worth it in order to grow quickly.

[@gustavovelazquez6736]

Cries in California

[@Amitinnovations]

Property in my area is insanely expensive though

[@aliciacuentas6300]

How you get that factor.? I mean the 1.0175

[@SundayVibesmusic]

Man now I feel like I should prepare to sale my house I bought last year

[@lionheart93]

there's no way u can get a suppler like this in California unless it needs rehab or thoughts?

[@Fearless533]

Or New york lol we screwed.

[@stevenroshni1228]

So it's really that you need $5,000 plus six months of reserves plus inspection for this plan to work?

[@ChandlerDavidSmith]

At the end of the day, getting an inspection and having those six months of reserves is what makes me feel the most comfortable with investing. Not everyone does those things and they’re fine, but when problems arise, they’ll be in more trouble than I would be

[@shsfootballanth]

I wish houses in my state were under 250k lol

[@TheFoeminator]

This is impossible to find in massachusetts bro, the cheapest house around is like 280k

[@elisscaliving5864]

Invest in the hood

[@juanjuarez3643]

U lost me at extra expenses, what exactly did u multiply by .85?

[@anon12three4]

He means .0085 ....

[@jamesmcclellan8554]

Why do you care so much for cash on cash return? When in reality, I'll buy my next few properties with equity and when everything is paid off have massive cashflow.

[@henrycollins2478]

As a 14 year old, what do you think of trying to flip stupidly cheap real estate? Thanks! Keep up the great content

[@mikefeir]

Something tells me Chandler isn’t 14

[@Blitz3O2]

Dont listen to this guy. You will be in debt forever

[@henrycollins2478]

RackPullAboveTheKnees I did word that poorly

[@henrycollins2478]

Blitz3O2 then why are you watching him?

[@ChandlerDavidSmith]

I’m glad you liked the video! Do what you can with what you have, man! Never too early to get started

[@BackInService]

Dave Ramsey would be very upset...

[@ChandlerDavidSmith]

Yes!! 🤑

[@BackInService]

@@ChandlerDavidSmith 🤣🤣🤣

[@Real.Estate.Report]

Lol

[@JB-xs3wu]

Please don’t listen to Dave Ramsey unless you really have trouble with debt 🤣

[@jalabi99]

Dave Ramsey isn't going to be my tenant LOL

[@rageonlifefor2]

Lol where do I find a multi family unit to live in under 150k??? Not a single one in the 3 cities I could live in lol

[@joeschavone7217]

What if I had $500,000 to start with

[@bradleywilshere8017]

It’s a good choice but I’ll advise you start up slow.... do well to contact an an agent directly. [phone]

[@matthewcain2880]

I meant to say PIMP

[@jonathanjones4737]

Hahaha my man...

[@LaRana08]

Don’t do this guys

[@thenman23]

but why not?

[@zakariyanagi6465]

First

[@adithyamukund8879]

Hey Chandler. In at least one of your previous videos, you mentioned that even if someone plans on using an FHA loan to get started, he/she should still make sure that there is at least a 15% cash on cash return rate as if 25% was put down. You didn't talk about this in this video, but is that still necessary (even with this property), and if so, why?

[@agrady91]

First

[@watchanime331]

Second

[@DigitalPlacebo]

Are you suggesting having the six months reserve money before even starting this? That would require more than the $5,000. Or are you saying to accumulate and save that up after you've acquired the home?

[@lorenceman]

“If it’s a month or two, you totally suck” lol I agree, two months is unacceptable.

[@ChandlerDavidSmith]

Hahaha yeah...

[@michaels9612]

I’ve always worried about vacancies and I’ve only speculated home purchasing as of right now...

[@moonbentley7412]

@@michaels9612 have u bought a home yet?

[@michaels9612]

@@moonbentley7412 October 2020 yeah

[@ryansatchell2302]

Don't they require you to open escrow and put 3-6 months of reserves in it if you do FHA? So your real upfront costs are: down payment(3.5%) + Upfront PMI(1.75%) + Escrow 3-6 months(Home insurance, PMI, taxes). Even without closing costs, this would run you way more than 5K upfront, no?

[@mysterybuyer3738]

I used to think real estate investing was very scary but I am slowly figuring it out. Thanks for the info.

[@alexandermbot9467]

Man this is such a great information for someone who wants ti get in real estate but doesn't know much about it, I gotta search more about the FHA in the area of San Diego, but really great man, thanks, keep it up👌👌👌

[@Real.Estate.Report]

I agree! If you have no experience, this is a great place to start. I bought my first home with an FHA loan 9 years ago and I've been in and out of over a dozen since then.

[@ChandlerDavidSmith]

Thanks so much!

[@theg35project50]

$1,400.00 rent 😳 Where Do live

[@josebenavidezzzz]

Man, 140k for a duplex, wish that was the case now haha

[@Jigga57]

It was never the case where I live at lol even for single family

[@nicktreiber]

Sweet! I just downloaded the app. I live in California, everything is do expensive here do I’m going to test this here!

[@CaseyBurnsInvesting]

There’s a method to not getting crushed in Real Estate So many people who got crushed didn’t follow it.

[@ChandlerDavidSmith]

Agreed

[@pchuck1439]

I wish I did this ten years ago!

[@rockyt.7251]

What method?

[@georgesenda1952]

Are apartment building prices going down as homes are around most of the country ?

[@johnrobertson724]

$312 for insurance on a $140k rental property!? Who’s your provider?

[@PLLuxuryReviews]

Hi if I’m looking to purchase a property is this going to have to be my primary home ? Can I get an investment property with 5 % down ?

[@Real.Estate.Report]

No you can't with a conventional or FHA loan. Maybe with a hard money loan or a private equity loan.

[@ianscianablo8507]

Hi Chandler. I currently own my house, which I got from my mother. Can I still get a FHA loan on another ouse? Which is the better deal owner occupied or FHA? I prefer to rent out my current home. How does one REALLY cut a deal with zero closing costs? Thanks!

[@zeusgod2k148]

Yes you can get an FHA loan but can only have one at a time unless you pay it off afterwards you can get another but your not consider a first time buyer so do your research before getting another loan

[@Picwajzzz]

sooo we gotta move near Chandler because in Wilmington, NC i cant even buy a 2/2 house less then 170k... unless its ghetto area wheres shooting all over

[@thaddeus1519]

What about if you are in California and houses are 700k.

[@rafa7363]

Even when people say is an FHA, PMI etc... you can do a refi to conventional loan after a year if you want to rid of that fha deal. Excellent info brother I aprecciate your value time to share us all your knowledge. 👍

[@RossCampoli]

Oh the comment section is a party over here

[@ChandlerDavidSmith]

Haha love it!

[@JSephH76]

"Well look at this duplex I bought these deals do exist" Yeah. That would be valid IF it wasn't an FHA loan that required residency. Because it IS and it DOES showing us your deals in your area doesn't mean squat. I live in Nashville which is one of the hottest markets in the country rn. On top of that our zoning is incredibly hostile to small multifamily units so there are are barely any 2-4 family units AT ALL regardless of what your budget is. A 2 bed 1 bath single family home an hour south of the city goes for 250k right now. So no. Deals like that definitively DO NOT EXIST anywhere near me. And because FHA requires residency that means I would have to move long distance, quit my job, find a new job, get approved for a mortgage based on that new job, and then and only then would I have a chance of replicating anything close to what you show in this video. My point here is not to whine about my local market. My point is that you can't just show us what you get in your area and tell us "well I did it so you can too" with a loan product that requires residency, at least not without making it clear you have to uproot your whole life to do so. This isn't an issue with normal long distance investment properties but in a video about FHA you can't just wave random numbers around and tell people it will apply to them too. If I am wrong in any way about this feel free to correct me because I would love to be wrong about this lol

[@DT-471]

140K USD what state are you in? Only thing you can buy at that price in southern California is a stationed mobile home at a trailer park.

[@krisjoint225]

This guy is GOOD

[@ChandlerDavidSmith]

Thank you!! 😉

[@DavidDelahunty]

Thanks for the video Chandler! I will be looking to purchase my first property in the next 6 months using an FHA loan. Also a great way to get my feet wet with investment properties.

[@brysontibbitts]

At 7:30 MIP is 1.0175% then at 10:55 MIP is 0.85%. What am I not getting here?

[@Zach_breen]

FHA is 6.8 now

[@loganroca]

Man giggles

[@ChandlerDavidSmith]

😂😂😂

[@loganroca]

But I love it

[@puffthemagicdragon1115]

How does this guy only have 125 subscribers? Makes no sense.

[@senpainft6860]

My area (Phoenix) doesnt really have Duplexs. Thoughts on doing this same thing with a 2 bedroom apartment near University and renting out the other room then moving out and renting out both?

[@jalabi99]

That would work.

[@aliciacuentas6300]

Thank you Chandler, you are a great teacher.

[@tsalas07]

should you do a 30 yr FHA or 15 FHA???

[@davidgraham1601]

Is the CDs calculator on Galaxy store

[@lone.1629]

duplexes near seattle are like 700k lol

[@JohnDoe-mw6yt]

You are not imputing the reserves but ok

[@sanitize808]

One of your best videos! 🎉🙏🤙

[@geno816]

Holy. Your channel is growing. Congrats

[@lansrapnews9841]

do you have to live in your fha loan house ?!

[@staplegun3703]

conventional loan better

[@BSeck]

Why is there no mortgage?

[@pchuck1439]

I wish the taxes in my state were that low! LOL!

[@TheDollabillz07]

1.25 mark.. that 😂

[@spldrong]

Please explain more about how you use LLCs.

[@GoldCODMyt]

Wow only 5,000 for a down payment. That’s awesome, gotta get that credit score up

[@Ninjawarrior420]

620

[@kamuelawilson265]

This is great inform! Thanks Chandler!

[@ChandlerDavidSmith]

Thank you for watching!

[@goodfella427]

Wowww...I enjoyed the phony testimonials from Ana Maria and friends about Charles Parker trading services....I imagine it must be a scam

[@julio__garza]

so each app I've tried doesn't look good after I remove one half of rental income due to me wanting to live on one side of a duplex. How do I account for that? Or will a lender take that into consideration? I wouldn't plan on living there forever so eventually monthly income would increase.