Business plan question

7 Replies

Hello everyone 

I just finished the ultimate beginners guide and thought my business plan would be next step to pave the way to my investment goals, but have a question in the criteria portion 

Criteria - asked to define Ltv. Which I know is loan to value, from what I understand the lower the better to avoid pmi and highest interest rates. however just starting out I would believe my Ltv would be no less than 75% because I want to attain multi family units less than 5, so I would need 25 % down, using a bank loan. I'm getting confused on number I'm trying to explain I want or if my thinking is accurate. 

My background if you haven't noticed is very new, so I appreciate your feedback and patience ahead of time.

Thanks again 

Jared 

If you are looking to a get a general conventional loan for a property of 1-4 units that you will not be using as your permit residency then yes you would be looking at putting 25% down. Some bank/lenders in your local area may have different loans out there that only require 20% down. Either way this will avoid any MIP/PMI that you would have to pay and your LTV would be 75% (for 25% down).

Now if you plain on using the multi-family as your residency (live there and have the rents cover your mortgage and bills ((house hacking)) ) then you could try and get an FHA loan which requires 3.5% down and requires you to pay monthly MIP which is roughly 1% of the loan amount. This would be a LTV of 96.5%.

Hope this helps.

@GregSzymbor yes it does help. Initially I think this might be the best route for me ,is the house hack and FHA loan. On later properties I would like to achieve allot lower ltv. So for my target money goal, should I plan 3.5% and add 3 more % for covering costs ? Thank you again.

Jared 

Originally posted by @Account Closed :

@GregSzymbor yes it does help. Initially I think this might be the best route for me ,is the house hack and FHA loan. On later properties I would like to achieve allot lower ltv. So for my target money goal, should I plan 3.5% and add 3 more % for covering costs ? Thank you again.

Jared 

 Sounds like a good plan.   Talk to some local banks to see what options they have and for pre approval (or steps needed to get pre approval) 

@Kurt K. Sounds like a good next step, thanks ! 

Congrats on getting started. I'd make two things a priority at this point:

1.Spend time talking with lenders, go to at least a few local banks and just talk to them about what you want to do, what they require, and what they think you need to do to get there. Don't be intimidated, you need money, it's there job to loan money, you really have no idea what you need, what you can get, or what they offer until you talk to them. "Hi banker guy, I'd like to invest in real estate, what do i need, what do you suggest I do to get there"...... Wahla..now you have accurate information for your plan. Trying to guess ATVs or rates is a waste of time, go to the horses mouth and learn.

2. Yes you want to get a multi family with your first FHA its the one chance you have to get in at that kind of rate for those kind of terms. Secondly and most importantly, managing the property on site will teach you more than anything on any of these forums ever will, trying to figure it all out before you get into will simply delay your success. Go talk to the banks, get your 3.5%, go buy the property...you can plan a little better once you have some experience...

@Brandon Stevens thank for taking the time to post. This hits home for me, because the literal mountain of info there is to ingest and avenue to get there. Just do it and stop the analysis Paralysis.  Should I add 3 more % because of closing costs? Thanks again  

3% is a good standard 2-5% is market. Remember everything is negotiable, every lender has different reqs, and every deal has its own details.

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