Have recently moved over to LA from the UK and am looking to get started in real estate out here.
Have little in the way of capital i.e. 10k and no credit score (not transferable overseas). However, my wife has 750 credit score so we aim to use her name for the first couple of properties.
I was wondering what people's thoughts were on FHA loans for a first investment property? i.e. pros and cons? As I understand it, there is the potential to put as little as 3.5% down (when purchasing mortgage protection), but are there any different stipulations for investment property as opposed to one you intend to live in? Would be looking somewhere further north such as Fresno/Bakersfield etc. where prices are much lower than LA.
Thanks in advance
nevermind - have just come across some information suggesting that you can only get an FHA loan if you live in the property.
Have you looked into using a private money lender? They are typically more flexible / creative on how they can fund deals for folks in your situation. Because the loan is secured by the asset (property) credit takes a back seat, and some private lenders will allow you to pay the loan origination points on the back end of the rehab/refi so little to no money needs to be brought to the deal (for the right deal). With your spouse having great credit, you should have no problem refinancing the rehab loan out to a fixed rate mortgage. (assuming she has steady income)
Bottom line, when you work with private money lenders, you get more flexibility in regards to terms and creative funding options.
Thanks for this - very interesting. The 'hard money' lenders I have previously looked at were all offering a maximum of 65% ARV, with origination fees, misc fees and other start up fees coming to 4-5k minimum?
So you are, in essence, suggesting once I find a decent property I should look for a private lender to start with and then once in the rehab process, use a mortgage to pay off the initial lender? If so - that finance does sound creative and advice much appreciated.
apologies, misread your sentence re the origination fees - that is certainly interesting and something I will look into.
@Michael White Have you considered "house hacking?"
Use the FHA loan for an owner occupant, which allows you to buy 1-4 units. You have to live somewhere, right? Buy a triplex or a quadplex, live in one unit, and rent out the others. Your tenants will help pay your mortgage. It's a great way to get started in RE and you can get a great loan with FHA, especially with rates so low.
@Andreas Mirza that would be great, but the LA prices are so inflated that it makes it tricky for a first time buyer to get involved in that sort of project.
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