Am I In A Good Position To Purchase My First Investment Property?

Question

Okay so it isn’t me, but my mom. We are interested in purchasing a multi-unit property in Charlotte, NC and live in one of the units, and plan to rent out the other rooms or list them on Airbnb. She currently has a a very low-paying job, but has $95,000 in savings and an 830 credit score. She was approved for $115,000 from a big bank, but she is not allowed to use it for investment purposes. Are there any specific banks or loans we should be looking for? I have been researching multi-family fha’s and 203k loans. Also, I was wondering where I can find off-market deals from wholesalers. A four-unit building would be ideal, but I have not found many in the Charlotte area online. Are we looking in the right direction for our first investment property? Any input would be greatly appreciated, I don’t want to steer my mom in the wrong direction.

Fradel Schaechter · Answer

@Lamar Lamont For someone that has a low paying job, your mom managed to accumulate a LOT of cash! Kudos to her and good luck in you investing journey!

To be a really informed investor, check out the podcasts here and be active on the forum is what I suggest.

Randy E. · Answer

Unless the $115,000 she is already approved for is some type of special loan arrangement, she should be able to use it to purchase a multifamily home as long as it doesn't exceed that amount --- or if it does, she can use some of the $95K to bridge the gap.

For instance, there is currently one duplex listed in Charlotte for $145K.  She should be able to use the loan for $115,000 and add $30,000 cash from her savings to purchase it.

And as mentioned above, you can always look in the areas adjacent to Charlotte for some duplexes and triplexes that might be a little cheaper.  I sincerely doubt you'll find a fourplex in or near Charlotte for $115,000.

Antoine Martel · Answer

WIth $95k in savings and with a bank loan approved you can do a lot of things!

You can buy properties out of state for $60k, put $15k down, finance the rest, cash flow $250/mo. Then do that over and over again.

WIth $95k you can do 6 properties like this which would cash flow around $1,300 net cash flow.

Colleen Goldstein · Answer

Typically wholesalers would be wanting all cash deal (some exception). You may be better off finding a partner to go in on this one (split building, negotiate roles & responsibilities due to financial qualification assistance needed to obtain property).  You’d need to specify a little further in terms of “low paying job”, maybe provide how much she is able to save a month? That would help with understanding the risk tolerance.

Gastonia is a popular place for investments where she would be able to purchase cash.

It seems a little ambitious to move into a four-plex as your first property. With no property management Expirience, reserves for maintenance/vacancy, and low paying job- it seems a bit high risk without another party. Would potentially look into a duplex, or a SFH that would appeal to Airbnb or short term rental (basement space or above garage apt). Or even just getting her roommates in a house with a layout she’d be comfortable with enough privacy.