Quick Newbie Questions

30 Replies

I called my credit union, Navy Federal and asked them some specific questions about their mortgage programs. Here is what I found out: 1. Only a SFH qualifies for 100% financing. 2. 100% financing can't be used for investment properties. 3. There is no length of time that I would have to live in the home before I could rent it out. 4. Navy Federal does not give a mortgage for anything more than a 2 unit property. So right now we really do not have enough money saved to do a down payment currently for the FHA or conventional loan. But we are buckling down to save more aggressively. We want to get started in real estate by putting one foot forward. I'm tired of procrastinating, making excuses, and watching everyone else more forward. Here are my questions: 1. Should we wait until we have saved enough money for a down payment on a multifamily or just purchase purchase single family home as our primary residence with 100% financing? 2. If yes, should we fix and flip this home to make money for the down payment on a multifamily, or buy and hold for income? (which this could also help to save a down payment for the next property and continue with building equity and bringing in month income.) 3. Lastly, after purchasing a property, where do you get money to fix it up? Credit Cards? Personal Loan, Extra money from personal income? Thanks in advance for all suggestions and advice!!

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Julius, I'm not sure I understand what you are tying to say.

Hi LaVonna,

I'm kind of in the same position. I've set a goal to get started in 2018. I have been looking into "business credit" as a way of financing my investment portfolio. Again, I'm in the process of researching all options myself but so far it sounds like the best option to me. There are companies that will assist you in creating an LLC and obtaining "business credit" to fund your real estate deals (down payment/rehab). Listening to one of the BP podcast a guy mentioned he used it to purchase a property. I hope this helps. If you have any other ideas please let me know.

Good Luck!!

Two methods you should look into more is "House Hacking" and Owner Financing.

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Javier, I have done a lot of research in obtaining business credit. So are you going to start out with an LLC for your first deal? Do you know which episode of the podcast went into this topic?

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I have to agree with @Account Closed

You probably need more financing and more education before you buy an investment property.

I would also call every bank to find out what their lending terms are anyway to get  more educated.

Why not a 4 unit with another bank? This would provide more cash flow and mortgage support (usually)

Your first time home buyer credit should cover most of your FHA requirements even on a 4 unit.

Or maybe just buy bitcoin and wait six months so you have more money to play with

Personally I would be very leery of 100 percent financing unless you’re buying at a significant discount. Definitely don’t buy at market value for a rental with 100 percent financing.

From what you e described I’d recommend saving more. The key is to get your savings rate up into the thousands per month. Once you reach that rate things can happen quickly

I agree with what Julius and others are trying to tell you.  With all due respect for Brandon Turner, just because you can buy with no money down doesn't mean you should. No money down isn't the same as having no money.  What happens when the AC breaks, if you have a vacancy should you buy a multifamily, or your car breaks down?

Consider yourself in the preinvesting stage.  Save up, get your expenses in line, and continue reading and learning.

Knowing when your not in a place to buy is as important as finding the right deal.

@LaVonna Shannon I would talk to some other banks. Sounds like you are talking about a VA loan in which case you would be able to get up to a 4 unit.

If you can get into a house hack 2-4 unit property with no money down and that doesn't terrify you then go for it if you can make the numbers work. The main goal is to live cheap or free so you can save up to build a portfolio.

If you are military or former military and are eligible for a VA Loan I would get a hold of a mortgage broker in Fort Lauderdale, Florida and ask them to help.

Let me know if you need anything and good luck on finding a good house hack! I've saved $15,000, made $7000 cash and built $60k in equity on mine this year at a minimum.

LaVonna, if I decide to go with business credit, I think one of the requirements for obtaining it is to have an LLC in place.

House hack is the way to go but what you should do NOW depends on your knowledge. Im a newbie and havent even made any deal yet so im not speaking down to you arrogantly but i get a hasty vibe from you that you dont have a clue what you are getting yourself into. Ive been on bigger pockets for a month and a half now and have gotten my arsh handed to me quite a few times by the vets and recommend you stay on here for a while and ask about finding good deals and the real costs that go into buying a property because i know i was shocked to learn those. If you want a non risky challenge try and find a deal to wholesale, it has been hard on me so far and new pockets of chaos keep popping up in my pursuit of a first deal that have taught me how difficult it can be to find a good deal or do real estate. 

Best of luck in getting your butt kicked by the learning process! Im not there yet but the rewards sound very much worth it and once you know what to do, you know what to do!

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I know that it can be done. I am learning day by day. I don't believe I. someone tell me to wait it out. I will get this done. I don't have to have thousands of dollars coming in for me to get started. I have been doing a lot of research. My methods may not be like yours, but that's okay. I listen to BP podcasts in my car everyday and so.e people started with a lot of debt, unlike myself. Thank you all for your input.

Im not saying wait it out, i think you should definitely take action by negotiating a great deal, you make money when you BUY. Dont pay retail! Start by looking at the 70% rule.

Navy Federal is a great credit union.  They just sent me a happy 25th anniversary gift.  Yikes!

But I've chosen not to do a VA loan with them or anyone because they are more expensive than conventional with their 'funding fee'. The only benefit is no down payment, which to most doesn't end up being a benefit at all.

The thing I did was save before I bought.  I also eventually knocked out credit cards, car payments and all 'bad' debt.  Just anchors on your journey.

Save while you learn.  Nothing on fire here. You are in the right place @LaVonna Shannon !  

I'm not saying that I am an expert but I have been listening to quite a few podcasts a week, and listening to real estate books. My husband and I work full-time jobs and are currently saving a little more aggressively. Maybe I threw too much info out there at once, but I just wanted to see what feedback I could get. Also I am not referring to a VA loan. NFCU offers 100% financing, for 1st and 2nd time homeowners. Thanks everyone.

@LaVonna Shannon I am from Fort Lauderdale and a newbie as well.  I am looking to jumping into investing  and learn as I go. Of course we do not have all the answers but it's a process. I am looking for deals as well speak to invest it. Let me know if you want to network and we can figure it out! Im ready!

Heres my 2 cents on your questions:

1: It really depends on the deal whether 100% financing will work. Like @Cody Evans said, look at properties using the 70% rule. If you are buying at enough of a discount compared to the ARV, 100% is a viable option. But if you're buying retail, you're setting yourself up to go upsidedown with even the smallest of market adjustments.

2: If the numbers work a flip could be a good way to make money to put into future deals. Emphasis on the numbers working. Do your homework on the all the possible expenses and ways the property might go over budget, which roll into #3

3: Where to get the money for the fix up? If that is not a solid part of your plan you are doing it wrong. Read some articles on flipping, read the book, listen to all the podcasts. Armed with all the knowledge you have been getting "day by day" you should know there are far better ways to account for and finance the cost of fixing.

As @Dave Ramirez  I suggest you continue to educate yourself and come up with a plan. Study the location you intend to invest in and get a feel for the market. But have a plan that accounts for financing the deal, the fix, and the sale. 

@Wes Woodhouse thank you so much for breaking it down and answering my questions. I definitely appreciate your input.
@Evan Poole I would love to connect with you to get some more insight on things. I'm open to learning as much as I can.

@Account Closed mentioned, it can be done. LaVonna if this is the option you choose, go for it. There are many avenues you can take to purchase your first property. Just like you, I don't have anymore time to waste!!

Good luck and happy investing!!

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