Slow Start

10 Replies

BP,

I am beyond frustrated. I have done so many things, talked to so many people, understand almost each scenario and have a goal of what I would like to do - but I am still waiting and not acting. I have dome everything from searching online daily, cold phone calls, and even door-to-dooring looking for my first prop.

My biggest fear is not moving forward, and while I know I am more educated each day - I want to get started but for some reason I am having trouble seeing the opportunity. My goals are as follows:

1. Acquire a multi-family property with FHA 203k financing so that I can instantly walk into 20%+ equity in my property.

2. Refinance out of the FHA loan as quickly as possible to avoid PMI and nullify the owner-occupancy rule then lease out the other side.

3. I want to have a minimum of $100 in cash flow per door monthly at very conservative numbers.

I know investing is about confidence and believing in your process, knowledge, and will power - but it has been difficult to get started and have a track record to push me along to something I want to do the rest of my life. I'm ready to pull the trigger, I just need something to come into my crosshairs.

Anyone relate?

Hi Evan, refinancing the FHA 203k does not nullify the owner occupancy rule. You will have to live in the property one year if you get a 203k loan.

Mark Ferguson, Real Estate Agent in CO (#IA40029358)
Originally posted by @Mark Ferguson:

Hi Evan, refinancing the FHA 203k does not nullify the owner occupancy rule. You will have to live in the property one year if you get a 203k loan.

Mark - If you refi out of a 203k your owner occupied requirement goes away as the 203k contract is now void, correct?

@Evan Manship  

Have you looked into NACA, VA Loans or Rural Development options? Those are 0% down loan options.

The 203k loan implies that you are going to fix up a place.  What about just finding a good deal on a 3-4 family that allows you to live for free?  The 203k process is straight forward but arduous.  

I've seen a fair number of places in Indy that would make good investment, especially if I was local.  Non owner occupied AND that wouldn't require you to shell out a year's salary to invest in them.

If you haven't already, talk to @Steve Lawson here on BP.

Originally posted by @Aaron Montague :
Originally posted by @Mark Ferguson:

Hi Evan, refinancing the FHA 203k does not nullify the owner occupancy rule. You will have to live in the property one year if you get a 203k loan.

Mark - If you refi out of a 203k your owner occupied requirement goes away as the 203k contract is now void, correct?

 No, That is like having a contract to buy a home that is voided because the sellers found a new buyer who would pay more and they signed a new contract with that buyer.  You can't void a contract by entering into a new contract with a completely unrelated party.  A contract is voided when all parties to the contract void it in writing.

When you refinance a loan you are paying off the loan and the deed of trust will be released.  All those documents you signed at closing saying you would occupy the home are not voided. You still have to fulfill the obligation you agreed to.  Are telling the original lender you are moving out early and getting them to sign off on it? 

Mark Ferguson, Real Estate Agent in CO (#IA40029358)

Thanks Aaron. I havent looked much into VA or NACA loans, however, my brother @Clay Manship  and I are both familiar with Steve and what his company does. I would be interested to learn more about these types of loans particularly if 0% down is an option.

I am working on my brokerage license that should be complete by year's end and would love to pair my first deal with it.

@Evan Manship  Hang in there man! I think pulling the trigger on the first one is the hardest. Once you do it and understand what it all entails, you will be able to move forward more quickly moving forward. It sounds like you're doing fine, just need a good lead to come in to jump on.

@evan 

@Evan Manship  so what specifically is the holdup? Is it not finding the property or is it being shown properties but not pulling the trigger? If it is not finding the properties then perhaps find other agents to help you in the search. If you are pre-qualified and ready to close then finding a cash-flowing property in Indianapolis should be fairly quick - although I personally haven't invested there (but was there recently to look at an apt community). That said, I know @Rachel Randolph  invests in properties there and lives there now so she might be able to help you with your search. 

I am new to REI however our strategy is to ease into it with smaller investments to get the hang of things, make the right connections, and get familiar with the market. We just purchased 2 SFH in Indianaplis for $39000 each through a turnkey company as we are out of state investors. We are also testing the property manager with these properties to see how things go with that. As the process moves on we have not had any issues and plan to return to Indy to purchase a few more in the new year. This time we are going to focus on different areas to help diversify our portfolio within the Indy Market and plan to meet with the same companies we met with before to continue to build those relationships. My initial thoughts on your post is that jumping into a multi unit complex out the gates may not be the best decision for an inexperienced investor. At least that's what other investors have told me. I have also heard that SFH are easier to rent and sell when compared to multi units for this market. Regardless with a market like Indy I think you will make money no matter what you buy as long as you do your due deligence.

@Evan Manship  It sounds like a classic case of analysis paralysis. Indianapolis is a great market. You should not be having any trouble finding properties there. @Joey Noel is right on the money about multi-family. I know the Indy market well and I don't recommend multifamily to inexperienced investors. They have a lot more challenges than SFR. Feel free to reach out if you'd like any advice or help.

@Evan Manship  

Hang in there. There are plenty of properties out there that you can get your feet wet with. You may want to find a SFH, duplex or triplex to get your feet wet. You can find your $100 per door objective in other ways.

Good luck!

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