I would like to start my real estate investing adventure in a "buy and hold" of small multi-families. I do not have much for down payment so I am thinking in going for an FHA loan on the 1rst property by the beginning of 2015. I expect to have a 10% down-payment for my 2nd property by the end of 2015, what type of loans should I go for?
You'll probably need at least 15% for an investment mortgage from a bank. That's the lowest I've heard of recently. 20% would be better to avoid PMI in some form. A 30 year fixed loan will give you the lowest payment.
I got into my first endeavor with a FHA 203k loan. It gave me an extremely low down payment, 3% or so, and my interest rate is just under 4%. I also got 30k to rennovate the house which needed a good facelift.
A downfall to a low down payment is paying MIP on a monthly basis, in my case a couple hundred bucks. But my numbers were good, and they still are good. Actually they are great and will only get better. Another downfall is many FHA loans require you to to "make the property your primary residence" for a period of time.
I personally am a big believer in using as little of your money as possible when investing, especially for a long term investment property that you will pay on, more appropriately your tenants will pay, for 15-30 years.
I can't offer any advice on the 2nd property. I'm just about to start that endeavor myself. But I can say one year was not enough for me, and I think it will be 2-3 years before I close on my 2nd property.
Jon, you are right the downpayment for the second property should be at least 15 to 20% minimun downpayment, I would have to work harder to get the extra 10% before the end of 2015.
Erick, I agree with you in low downpayment, I will use my first property as my permanent resident for some time, so I hope to find a good deal to offset the MIP cost, at least for the first 5 years.
Thank you for your helpfull replies!
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