Starting my investing career with a Multi-fam

Jersey City, New Jersey
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Starting my investing career with a Multi-fam

Gareth Knight
Member since 2019 · 5 posts · 0 votes

 This may be a bit long but I do appreciate any and all replies, TIA. I currently rent and need to move out of here. In about 2 years I will be retiring and most likely move south, out of state. My thought is I buy a multi-fam (off market preferably) and house hack for 2 years then move south. I would keep the MFH I purchase and manage OOS. 

Now, I believe I need to go Conventional cz I'm looking at 2-4 units and would need 5% down?

I cannot go with FHA because it's MFH, correct?

Another question is if I'm looking at off market deals that come to me, I would need to come up fast with the money because the property may be sent to me through other means ( realtor, wholesaler, etc) than the MLS and nobody will wait for a Conventional Loan to close 90 days out.

Do I go with a Hard Money lender until I can refinance into a Conventional loan? 

Am I thinking along the right lines?

Thanks again,

Gareth Knight

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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    2y

    Gareth,

    You can use FHA 3.5% down to buy the MFH and those loans only take 21-28 days to close. I cannto speak for all the banks/lenders out there but that is the noraml process I see every day on my end. You can use FHA 3.5% down or Fannie Mae 5% if you are talking about Multifamily home. If you mean Manufactured you can go Fannie 3% down either way it still only takes 21-28 days to close a purchase.

    Feel free to reach out if you have any questions or need more details I enjoy helping and talking REI!

    [email protected]727-637-4289
    0Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    2y

    If you are planning to buy now in Jersey City and keep it, that doesn't make sense. The rent return for 2-4 families in Jersey City won't be sustainable with an FHA loan now or in the future when you leave. If you know where you are going, you should start saving for that market now instead. It's very, very hard to win with a FHA loan in New Jersey now because there is a lot of competition and the properties need to be in good shape to pass FHA inspections.

    [email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    0Reply
  • Gareth Knight
    OP
    Member since 2019 · 5 posts · 0 votes
    2y
    Quote from @Jason Wray:

    Gareth,

    You can use FHA 3.5% down to buy the MFH and those loans only take 21-28 days to close. I cannto speak for all the banks/lenders out there but that is the noraml process I see every day on my end. You can use FHA 3.5% down or Fannie Mae 5% if you are talking about Multifamily home. If you mean Manufactured you can go Fannie 3% down either way it still only takes 21-28 days to close a purchase.

    Feel free to reach out if you have any questions or need more details I enjoy helping and talking REI!


     Thank you for responding, much appreciated!

    0Reply
  • Gareth Knight
    OP
    Member since 2019 · 5 posts · 0 votes
    2y
    Quote from @Jonathan Greene:

    If you are planning to buy now in Jersey City and keep it, that doesn't make sense. The rent return for 2-4 families in Jersey City won't be sustainable with an FHA loan now or in the future when you leave. If you know where you are going, you should start saving for that market now instead. It's very, very hard to win with a FHA loan in New Jersey now because there is a lot of competition and the properties need to be in good shape to pass FHA inspections.


     Jonathan-

    Thank you for responding. I had to put Jersey City because BP only had two options, the other was Newark so I just chose one. Anyway, I see what you are saying about FHA inspections. So if I find a property that needs TLC or more, HML would be an option as would DSCR lending. Is this accurate?

    0Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    2y
    Quote from @Gareth Knight:
    Quote from @Jonathan Greene:

    If you are planning to buy now in Jersey City and keep it, that doesn't make sense. The rent return for 2-4 families in Jersey City won't be sustainable with an FHA loan now or in the future when you leave. If you know where you are going, you should start saving for that market now instead. It's very, very hard to win with a FHA loan in New Jersey now because there is a lot of competition and the properties need to be in good shape to pass FHA inspections.


     Jonathan-

    Thank you for responding. I had to put Jersey City because BP only had two options, the other was Newark so I just chose one. Anyway, I see what you are saying about FHA inspections. So if I find a property that needs TLC or more, HML would be an option as would DSCR lending. Is this accurate?


    No, you don't want or need either of those. Hard money is for flipping, nothing else unless you want to lose more money. DSCR is for when you can't qualify on your own and want the rent to be the collateral (in very general terms) and when you are house hacking, you want the low money down. You don't need to do FHA to do low money down. There are 3 and 5 percent conventional loans now, with strings. But low money down is very hard to win in NJ. Also, nothing that needs work should be what you look at now. That's what might be priced better, but with no experience and a plan to leave you don't want cap ex.

    [email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    0Reply
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