I am just getting started in Real Estate and am eager to buy my first property. I intend on buying a multi-family home and living in one of the units. I am currently working on my credit and saving money for a down payment. I plan on getting a FHA loan at 3.5%. I was wondering if anyone could give me some advice on certain things I should be looking for in the property. Should it be in great condition or should I go for something lower price that needs some rehabbing? How do I get extra money for the rehabbing? Also, after I develop cash flow from this property, how do I move onto the next property to make money?
What city/town do you plan on purchasing in?
In Jacksonville, Florida!
Thanks Orlando! As a newbie, I’m looking to understand the best way to go about house hacking and then move onto the next property and create a consistent cash flow. Please share any advice or stories that could point me in the right direction. Thankyou!
Jacksonville, as in downtown, or suburbs, or any of the four surrounding counties? just wondering...
Buying something that needs work, house hack and airbnb it monthly rental is a way to go...Jax has a monthly tenant need too, or you can do annual lease too of course....you said multifamily, t, I assume duplex, or 2+ bedroom single door, and rent out rooms..
live in it for a year+ and refi cash out, repeat...
hold it long enough for equity, some finc. places are doing a heloc on an investment property as opposed to requiring it to be owner occupied.., LOC are better than refi's if it applies to you come time..
BBVA bank has an un unusual good loan going on for first time.. there might be rehab loan built into it.. so as for getting rehab money, there isa rehab loan out there...or can use extra rent for fixing things upgrades..
(buyers are slowly coming back into having a little more advantage, as fall 3q-4quarter season comes upon us)
@Ashanta Kelly to answer your questions first I would find out how much of a loan you can get approved for. Call around to a couple different banks to get this information. You want to get approvals for the FHA 203k loan as well just in case the deal might need some rehab. The cost of the rehab will built into your mortgage.
Properties that need rehab or properties in great condition. Well that all depends on your confront zone. Will you be comfortable with managing contractors. Will you be comfortable living in the type areas that typically have distressed small multifamilies even if it is for a year. And who is your targeted audience for tenants. What quality of people you want to rent your units.
How do you move to the next property. You can do a Home Equity Line of Credit (H.E.L.O.C) assuming you have enough equity in the deal. Or a cash out refinance both have its pros and cons just search for some blog post about the difference to educate yourself.
If there is no equity save as much cash flow from the deal as you can if not all and cash flow recycle. How ever you plan to save for the first down payment continue to save that way for the second and add your added cash flow to that.
Hope this help let me know if you have other questions.
@Matt Berklacy I would like to be in the San Marco area but am not opposed to anywhere with a good deal. Thank you for all of your help. I will apply it and keep looking.
@Juan S. Thank you! I will be looking into all of this. I’m sure I’ll be back with more questions. You were a great help, thanks.
@Ashanta Kelly I am not a Realtor, but as an investor, I can tell you that San Marco has some major problems with flooding and the City has a plans to fix it, within 3 years. They need to build new pumps and systems to help with the major issue of flooding. You will have to get expensive insurance to live in the area on a sunny day, is it worth it when there are other areas that are not flood-prone? I think there are better options in Riverside and Avondale as well as Ortega. San Marco was devastated during Hurricane Irma, from major flooding.
With regard to renovation loans, the best person in NE Florida is Jamie Zeitz. Here is a nice article on him. Liz Bobeck Realtor, my wife, has worked with Jamie to assist people with renovation loans and he has been great to work with in Jacksonville.
@Jack Bobeck I agree 100% about San Marco and will take that into account now and look in areas that are fit to withstand disasters. Thank you for the advice and referrals!
You could pick an area that is less expensive than San Marco as well. I love the House Hack idea! Duval has 30 residential zip codes.
@Amber Gonion Thank you! I was thinking th same thing as far as the rehabbing goes. I know many have said that it can be overwhelming when you’re new. Great advice, thanks again!
If this is your first property purchase and you are going to house hack a few times, you may want to look into a Home Possible loan (Freddie Mac). I'm using this loan for my first property. It is 5% down but you can get an FHA loan after the Home Possible loan. It must be your first owned property for the Home Possible loan, however. But, that's 2 properties for 8.5% down total! The home possible loan also has the benefit of the ability to reduce/eliminate PMI when you reach 20% equity (if you choose not to refinance). Home Possible also does a remodel/repair version of the loan I believe.