Rental Property Investor · Providence, RI · Member since 2016 · 67 posts · 10 votes
Hi Team,
I would be happy to network with some Mass / Rhode Island BPers.
In the next few months to the next year, I am looking to get into a Duplex / Triplex on the Commuter Lines into Boston. Either somewhere like Canton, Randolph, Brockton, Braintree,Quincy or even providence or Attleboro.
I personally commute, and know a lot who also commute from Providence to Boston, and I think Naturally it is going to become more popular. I would like to get a FHA loan for a duplex around 400,000.
Here is my first newbie question (and trust me...i don't want to ask).
1. Can someone pre-qualify for a FHA loan? So they can bring it straight to a seller?
if not.....
2. Is there a way besides bringing a cash offer to the a for sale by owner - where I could speed up the sale? Because I heard the whole process of the sale can take 4 months. - or is that for realtor listed homes....
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
10y
Welcome! Those are good questions. Keep them up.
1. Yes, I can walk into a bank and get pre-qualified. Or apply online through any one of the online lending places. Higher credit scores bring me lower interest rates. Down payments have been getting lower in the past six months. First time home-buyer programs exist.
2. Seller-carry properties can close very quickly. The seller can choose to "carry back paper" which means accept payments from you over time, and not always does the buyer have to come in with a lot of cash. A search for OWC, or owner will carry, say on Craigslist or the local newspaper, is how these deals are still found. A lease option is another method by which a person can get into a property, with the idea that a portion of the monthly payment is credited towards the eventual purchase. And another thoughts: over 5 units are difficult to sell conventionally, because normally banks make loans on 1-4 units. And 5 units are over this...which means that owners of these properties have a hard time selling, and may be willing to help a buyer out. A friend of mine hand wrote letters to all the 5+ plex owners in our area, asking them to owner carry and got a good response.
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
10y
Welcome! Those are good questions. Keep them up.
1. Yes, I can walk into a bank and get pre-qualified. Or apply online through any one of the online lending places. Higher credit scores bring me lower interest rates. Down payments have been getting lower in the past six months. First time home-buyer programs exist.
2. Seller-carry properties can close very quickly. The seller can choose to "carry back paper" which means accept payments from you over time, and not always does the buyer have to come in with a lot of cash. A search for OWC, or owner will carry, say on Craigslist or the local newspaper, is how these deals are still found. A lease option is another method by which a person can get into a property, with the idea that a portion of the monthly payment is credited towards the eventual purchase. And another thoughts: over 5 units are difficult to sell conventionally, because normally banks make loans on 1-4 units. And 5 units are over this...which means that owners of these properties have a hard time selling, and may be willing to help a buyer out. A friend of mine hand wrote letters to all the 5+ plex owners in our area, asking them to owner carry and got a good response.
Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers (cash buyers). Find them through Google and meetup.com The Rockland REIA meeting is tonight at the Holiday Inn at 630pm
Hingham, MA · Member since 2015 · 78 posts · 21 votes
10y
Welcome @Samuel Carmichael. If you're getting an FHA loan, I'm assuming you're going to plan to live in it as is a requirement of the FHA loan? By the way, the property you linked to on zillow...I drive by it twice a day almost every workday. I'll take a look at it on my drive.
Hingham, MA · Member since 2015 · 78 posts · 21 votes
10y
@Samuel Carmichael - If you're using the FHA for the 3.5% down, and you can somehow create 25% equity at the end of the first year (value add, buy low, etc.), then you have the option to refinance. But you don't have to refinance if you don't want to. I'm pretty sure with FHA, you only have to occupy the property for the first year. And you can continue to get up to 4 loans (FHA or other) which I believe is a Fannie Mae/Freddie Mac limit.
Rental Property Investor · Providence, RI · Member since 2016 · 67 posts · 10 votes
10y
Is there a limit (besides credit score based) to the amount of an FHA loan?
I assume some 4plexes cost upwards of 800,000.
Also, I understand that current income from tenants can be counted as qualifiers for the loan....I guess a question I have is....
What happens when the money runs out. If my plan is to get at least 20 doors I would assume I would need more loans. After that is it only cash or private money lenders? Or by then do most investors have enough equity to refinance and use that money to continue.
Lender · Chicago, IL · Member since 2015 · 14 posts · 5 votes
10y
Samuel Carmichael yes you can do an fha with 3.5% down. You could use a percentage of the rental units to qualify as well. Message me if your interested in talking.
Investor · Fort Lauderdale, FL · Member since 2016 · 13 posts · 5 votes
10y
Welcome @Samuel Carmichael! I am in the process of a similar deal (purchasing a duplex/triplex with an FHA loan in FL) and the answers so far have been accurate to my knowledge. The FHA loan limit does vary from state to state (for example $345k in FL), check with your lender. Please continue to post any questions you may have!
One question I have for anyone out there is if all units of a triplex are currently leased when I purchase, do the leases expire with the sale or am I obligated to wait until the leases expire to occupy the home? Also, how would this work considering the owner-occupy for at least a year obligation with the FHA loan?
Rental Property Investor · Providence, RI · Member since 2016 · 67 posts · 10 votes
10y
Seems like to house back a 4 pled at least in the greater Boston area would cost over 800K. Anyone know the FHA loan limit in Mass? Or how one would circumvent this?
Rental Property Investor · Providence, RI · Member since 2016 · 67 posts · 10 votes
10y
Would y'all consider buying say a 140,000 condo, holding it for a year to season it. Then refi to put down on a new place? And stop me of I am totally totally wrong here. But could I do a 4-5% downpayment FHA loan on the 140,000 condo....then cash out refi for 80% of property value? or is it 80% of equity?
If it is 80% of Property value now couldn't I use that as a 80,000 downpayment on another complex? for a higher value like 700-800K? Or would a bank sniff me out - and be like....no way jose.