I found this forum a couple months ago and have been soaking up as much knowledge as possible since then. At first I was eager to get my investing career started with an FHA loan and owner occupy one unit, then rinse and repeat after a refinance was possible. Since then I learned about the extra costs and higher payments due to only putting 3.5% down. I am not focused on purchasing college town rentals about an hour away from when I live. And due to the lower housing costs I would be putting 20% down for every property that I purchase. My question is would it be better to rent my primary residence or start out with a multi unit. One of the main reasons I'm leaning towards renting is to keep my debt to income ratio low so I am able to aquire more properties l will gladly appreciate any help that anyone can give to help me get started out. Thank you in advance.
I'm kind of confused but let's say you use an FHA loan to owner occupy and the extra fee you're referring to is PMI, private mortgage insurance. After one year of "hardening" your house for renters and paying maybe 1k in PMI, you're ready to rent it out. Boom. Someone else is now paying not only your PMI but your mortgage, taxes, and insurance. Hopefully more leftover after you've done a full calculation on the property before buying and you're cash flowing some. Since you only went 3.5% down, you have money to buy another. This isn't to say you couldn't use an FHA on a multi unit either, because you can! So you could theoretically be cashflowing from day 1 while paying those "extra fees". Now you could consider going with a conventional loan and paying 5% down and losing the PMI after an 80% LTV is hit. Ask a lender about that option. I did it on my primary residence because everything I buy, I plan to keep for a looooong time.
Quickly, if you decided to buy a property with 20% down as an investors, say buh bye to a chunk of cash. You might cashflow better but it may take you a long time to get cash back where you need it.
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