Hello! I have been researching investing in multi-family homes over the past year. I plan to house hack in Lakewood, Ohio. Shortly after the first purchase I would like to save more of my own capitol from my full time gig to purchase another duplex in the area. Then continue to repeat and grow. I've heard some negative and positive on this approach.
Is financing your second property more difficult after a owner occupant purchase?
Thank you! Hi5!
@Colin Ferek welcome. I can't really speak to the viability of your plan. I would say that financing an investment property has more stringent criteria. Higher interest rates and greater down payments are starters.
normally you have to drop down a level of home to get lower financing rates meaning house hack a 3 or 4 family and than drop down to a 1 or 2 family but I believe you would just be doing conventional financing if you own and live in a 3 family and you try to buy a additional 3 family. Fha use to allow you to do this but they changed there laws back in 2013.
Depending on your state laws you will inherit your lease from seller. Write your own! Our tenants bailed after a month. I think because we were younger than them. But it's a great way to start. Stick to your lease. Your tenants will test the waters with you and you need that lease to follow like gospel. I have absolutely loved doing this. Only thing I would have done differently is bought a four instead of two. But I wanted in the game and with other circumstances our two works well for us and has awesome cash flow.
@Colin Ferek if you live in your first purchase you will most likely qualify for a lower downpayment. And because it's your first property you will have more wiggle room in your DTI to qualify for that property. Your second property you will need a greater downpayment, 20-25% most likely, because you will not be living in it so the banks will consider it an investment property. Also, the second one you will have less DTI to support the purchase. Most lenders today will not give any credit for current tenants rents, even if they are on one year leases. So your DTI will have to accommodate the new payment for the second property. Best of luck and have fun!
Hey you are on the right path! Financing a second property won't be too big of a deal as long as your finances are in order. Will probably be even easier.
Let me know if you have any questions !
Shoot me a message! Lakewood is a good play if you find a solid deal. I don't see much downside to house hacking. Anyone who speaks against it will have to come up with a pretty good argument as to why it's bad.
Additionally, if you have questions about financing, I'm pretty versed in that area. I also happen to work with lenders that are very investor friendly.
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