how do i buy a home to live in and still be in real estate investing

13 Replies

Hello BP

I have a house right now that I am flipping with my parents we got the house in sept. 2013 and want it on the market by june 1st 2014 the mortgage is in my name but my parents are doing most the rehab and we will split the profit 50/50 we bought the house for 118,500 and have about $90,000 in the rehab. its a nice 3 bed 3 bath with a great view of the lake but no lake access. we hope it sells for around $280,000 to $300,000 which leaves a profit of around $70,000 - $90,000 and 50% will be mine. I still live with my parents and want to buy a house to live in. I dont want to rent but if i buy a house I'm afraid i wont be able to finance another house to rent out. i thought about getting a duplex and live in one unit and rent out the other. I just want to make a smart decision so i can still invest in real estate but also have a house of my own. Does anyone have any suggestions or advice they can give? I would like to do the buy and hold method or flip another house what are my options if i finance a house to live in and then try to buy another to rent out?

a duplex or a triplex might be something worth exploring. You can get a good loan, plus you'll be able to collect rents and get a taste of the exciting world of landlording

One thing you want to keep in mind is that some loans (most low down ones) will require you living in the property for a period of time

Originally posted by @Jeff S.:
Buy a rental type house and move in for a year then rent it out. Rinse and repeat.

so once i rent out a house how am i able to buy another one? will a bank finance another house for me? do i need a large down payment?

Best way available is to purchase a duplex/triplex/4-plex using FHA financing. This allows you to buy 4 units, rent out 3, and live in 1. On top of that, you only have to put 3.5% down of the entire purchase price. Pretty powerful stuff.

The only caveat is that you have to live in one of the units for at least one year, but if that is what you are looking to do, it is pretty tough to beat. Good luck!

Duplex/triplex probably best place to start for your situation...however any personal debt will hurt your DTI if it's financed under your name...so depending on how much you put down, income, history etc it could be difficult to get approved for a 2nd mortgage...might want to look into purchasing a personal property and look into seller financing for a second property.

@Jon Rylander

You live in an excellent city for investing, your first step is done :)

Here are 4 good ways into buying an Owner Occupied (OO) property:

0% Down:
NACA (https://www.naca.com)
VA Loan (http://benefits.va.gov/HOMELOANS/index.asp)

3.5% Down
FHA (http://portal.hud.gov/hudportal/HUD?src=/topics/buying_a_home)

3.5% AND Renovations
FHA 203k loan (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203kabou)

5% Down
Homepath Owner Occupied

Not as cheap, but come with renovation options attached to the loan:
10% Down
Homepath Investment (SFH only)

20% Down
Homepath Investment (Duplex only)

25% Down
Homepath Investment (3-4 Unit Buildings)

Auxiliary:

http://203kcontractors.com/

Q: I like the concept of MFH investing, where should I start?

Short Response:

1. Eliminate your rent payment
2. Bring all deals to the BP community (and be humble when doing so)
3. Stick to the returns you want

Long Response:
Learn everything you can about multi family investing. Every day you should answer a few questions and write down several new ones.

The general theory is that you need to drive costs out of your life and/or add new revenue. If you live with your parents, and they don't charge you rent, good. I'd then start forcing yourself to put $500-700 away each month as a "rental" payment towards some real estate.

If you pay rent of any kind, to your folks or to another landlord, find a way to eliminate it from your life. My suggestion is to find a 3 or 4 family property that you can purchase. FHA loans are a good way to go, but be wary of the additional percentage points you have to pay each month as PMI. Homepath loans are great as they have no PMI. VA loans are even better, but require you to have served in the US military.

Run every deal you find through the BP community. Some of the responses are harsh, but they are eye opening. There are people on this site that have been buying and selling 4x as long as I have. When I find answers to my daily questions, I can almost always find the answers here at BP.

Last one for the moment: stick to your numbers. It bears repeating: stick to your numbers. If you want $200/month and a 12% Cash on Cash return for your investment, stick to that number. If you pick 12%, 9% is not good enough, nor is 11.7%. Make your offers accordingly.

@Jon Rylander when I was younger I did it with owner financing through an investor that didn't need cash. You just do what you can do. It is different for different types of financial positions you find yourself in.

My husband and I are buy and hold investors. We began by buying a "personal investment property". Or we would live thereby when my husband received military orders we would leave and rent the house out! We have 3 houses through that method. As we got older and had more money we bought a few "investments" hear and there as we had the money! We now have 5 houses after 2.5 years!

@Jon Rylander remember that at first, the bank will only give you loans based upon your income. Let's say that the bank will loan you $100,000 based upon your income. You could buy a single $100,000 house, 2-$50,000 houses, or 3-$33,000 houses.

@Jon Rylander - Here's how I got started. My wife and I were looking for a house to live in. We knew nothing at all about REI. We found a house that we liked in the neighborhood that we wanted. It just so happened to be an REO (we weren't looking for REOs, but it just worked out that way). We bought it and rehabbed it (I didn't even know the term "rehab" at the time). And before we could finish the rehab and move in, I got laid off from my job. Anyway, we went ahead and finished the rehab, moved in, got a home-equity-line-of-credit on the equity (we put some money down, plus got built-in equity on the purchase and with the rehab). Started investing after that using the HELOC.

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