Welcome to bp!
1. FHA or 203k is great option and its great you are pre approved!
2. I would not rent to family...... It may seem like a good idea, but I would not do it. If you inherit tenants, you will want to screen them and see if you want to keep them (if they are a tenant at will).
3. You can attend a local REIA, take a look at meetings on meetup ,com as well. The first time homebuyer class will be helpful, and you can also look into a landlord class (if you are self managing).
I guess im more willing to chose family over strangers because Im nervous of the outcome due to all these Massachusetts tenant protection \horror stories I’ve heard of.
I guess i will check that site out, and Yes i will be taking the land-lording workshop next month! Thanks for the feedback.
Unless you have a giant family you’ll have to rent to strangers eventually.
It might be hard to tell your family their rent is going up!
Screening is key, if you screen and take the right steps... you will eliminate potential problems !
@Alex Cornwell yea i guess letting them know on their birthday card would be awkward haha i guess it would definitely be easier being more stern with strangers
@Steve Bracero is there a guide/handbook to screening i can find that you know of?
@Gabriel Feliciano Some guidelines are 3x monthly rent, no evictions, everyone over 18 must fill out an application in full, proof of income or 2 recent pay stubs, you could also include a credit score as well
@Gabriel Feliciano FHA will usually roll the closing costs into the loan amount. So they will do 3.5% of the total including closing cost. My down payment ended up being close to 1% of the purchase price.
@Charlie Hyatt how did you get your down payment to 1% if you don’t mind me asking ? I thought 3.5 was bare minimum
I think he is talking closing costs... They can cost between 1-2% of the purchase price, or you can put in your offers seller will pay 5k at close etc
As a general rule, I would not rent out to family. You may be solving one problem but you are opening up a whole new can of worms on other potential problems. What would you do if they paid late? Would you evict?
Screening out your tenants is a great tool to eliminate many problems. Everyone over 18 fills out an application and pays an application fee. Many people use tenantreports.com the cost is around 28 and we charge 30 for the application for each adult over 18.
A lot of tenant headache can be minimized also by the property itself. Are you buying the cheapest house out there and the rent the house can command is also the cheapest? Well then you probably will be getting that grade of tenant. Many people make a lot of money in the lower income rentals but understand that there will be new issues there also.
@Gabriel Feliciano - I'll echo everyone else - don't rent to family.
I'm 2 years into my house hacking a duplex. I used an FHA loan to acquire it. You can also do a FHA 203K loan if it needs any rehab work completed. One of my best friends used it on a 4 unit and put around $25K of updates into the property - all of which was rolled into the loan.
So is the 203k a loan a separate loan added to the mortgage loan even if you purchase a property at approved max $?, is it through the same lender as well?
Oh ok, now im getting the picture. Thank you guys for the feedback!
@Gabriel Feliciano - the 203k is not a separate loan- it is the same financing you will use to acquire the property but the difference is the loan program allows you to create a renovation budget all in the same loan. It is through your same lender. You need to be pre-approved for your max financing but the loan officer should be able to explain to you your overall max finance which would include the renovation budget.
@Jeff Onofrio Ok i get it now, thank you!
@Gabriel Feliciano - glad to help!
Happy investing and reach out anytime!
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing