Realtor · Augusta, GA · Member since 2018 · 11 posts · 2 votes
A quick little background about myself. I recently turned 20 years old and gave up baseball about six months ago to work full time while going to school full time. I am a math major so numbers have always been my strengthened my current job is an assistant general manager at a restaurant. I don't make a great sum of money, but I am very conservative in my spending and a diligent worker. My dilemma is that I have found a Fourplex locally that was recently renovated and has a gross rent of 2600 monthly with a 99% occupancy. I am curious how to go about funding this property for rental purpose with minimal income. I have looked at a FHA loan as a possibility, but I was curious if my lack of understanding in financing option is blinding me from seeing a more efficient option. My purpose behind this investment is to own my first multi-family investment to lead towards a future in real estate investing.
@Salvatore Lentini
What lenders do you use? I am curious cause I am also starting with a four plex in Alaska and am currently going FHA. I am having one built brand new. Other financing options would be greatly appreciated.
Orlando, FL · Member since 2016 · 92 posts · 36 votes
8y
@Jack Bobeck can you expand on what you meam about the seller holding 10% of the note? I am still green and am having a hard time visualizing that deal. If you have the time of course to explain it that is!
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
8y
There is a lot of private money out there. Some of it will finance long term. Local banks might be a good option. Make sure you are buying at a number that is around the 50% rule if possible.
@Noah. Have you looked at your county or community to see if they have a program to help with down payment? There are a lot out there, and some work for 1-4 units FHA. That frees up your cash as a cushion for reserves and emergencies.
I agree with this suggestion. I assume you are a first time home buyer so take advantage of down payment assistance programs, tax reduction programs, first time home buyer programs, etc. Whatever is available in your area. Also NACA might be something worth looking into, I believe you can buy a 4-unit home with them.
Rental Property Investor · Jacksonville, FL · Member since 2008 · 784 posts · 528 votes
8y
@Cristian Aviles-Morales Get the seller to hold some of their money for a period of 3 years, while you work to get the property value to rise. This way they have some skin in the game, to stabilize tenants, if needed. The seller may have a relationship with the tenants, you may want to keep that positive.
I had a deal presented to me yesterday for a 5-plex in Jax, the owner wanted me to put down $125,000 for a property worth $500,000 and the owner would hold the rest for a period while I worked to get the value up. These deals are everywhere out there.
NACA might be something worth looking into, I believe you can buy a 4-unit home with them.
I explored NACA. Attended the first meeting. If you are on food stamps, need to be taught how to budget, and have a couple of years to get yourself in a position to buy, maybe. The person that made the presentation did not know that NACA will do multi unit. She did not understand the questions put to her about using rental income to help qualify. Google NACA and read the reviews.
Investor · Washington, DC · Member since 2017 · 198 posts · 323 votes
8y
That's sad to hear... I have been telling my poor friends about NACA... I heard they require more paperwork but it's worth it for 0% down and below market interest rates. Perhaps if I hold my friend's hand during the process we can overcome the ineptitude of the workshop presenters and get my friends into a home with no money down and low interest rates.
Aurora, CO · Member since 2018 · 180 posts · 166 votes
8y
I was very disappointed. I'm in a $$$ market such as you. NACA is misleading. 0 down. yes. low interest? only if you buy down. And thankfully I knew what the presenter was talking about, since she didnt.
The bigger catch that caused multiple people to walk out, was their reserve requirements. $15K for closing costs. Plus if you are going to have any payment shock, you must put the difference between what your rent is, and your estimated housing PITI payment into a savings account for that as well. For a year. Over and above the reserve/closing requirement. I have a 750 credit score, and when I questioned her on the time frame, she estimated it would be two years before I would receive "permission papers" to buy a home through NACA.
I took my daughter, who is a first time home buyer, looking for options. She kept looked at me and asked "how is this better? CHFA does the down payment grant, $1000 out of pocket, I'm preapproved for $300K. Can't I buy down the interest rate on it? "
I spoke with the other volunteer at the meeting (you are required to pay a membership fee and donate time to the cause) he said he was about to give up. He has provided the documents needed 3 times, and they keep getting lost. He is on his 5th loan officer, starting over each time, since no one has a clue what the previous one had done. He also said that they do a hard pull on his credit each time documents are uploaded, or he gets a new LO, and his credit is now 40 points lower than when he started.
Denver is a tough market, and since the presenter mentioned, repeatedly, that NACA was desperate for hiring presenters and LOs, I looked at their site. $14 an hour for a presenter. $8 an hour for an LO, plus what appeared to be a very convoluted commission structure. You can't buy a doghouse in Denver with an income of $14 per hour.
I really liked the sound of the NACA program, and the ideals behind it. The reality was something different. Maybe not as bad in a better market.
Charlotte, NC · Member since 2013 · 48 posts · 26 votes
8y
Terre B., I'm not sure why, but your post has several inaccuracies in it, and the general tone seems more as if your purpose is to discredit NACA more than anything else.
Your statement about "$15K for closing costs" is completely inaccurate. All closing costs on a NACA loan are in fact paid by the bank, either BOA or Citi. You do need a minimum amount of funds to purchase a home with the NACA Mortgage. The Minimum Required Funds ("MRF") are funds you must have available to pay costs associated with the purchase of the property, pre-paid expenses at closing and a reserve for costs once you close. The MRF for the NACA Mortgage is much lower than any other mortgage since the lender pays thousands of dollars in closing costs and there is no down payment requirement.
Also, the statement "you must put the difference between what your rent is, and your estimated housing PITI payment into a savings account for that as well. For a year. Over and above the reserve/closing requirement" is also false. If you are seeking a mortgage payment that is more than your present rent, NACA does require that you show that you can afford to make the larger payment each month without fail by saving the difference each month for a minimum of three months, which we call Payment Shock Savings ("PSS"). The PSS is not in addition to the MRF, but in fact can be counted toward saving for the MRF.
Again you have a misleading statement with "I have a 750 credit score, and when I questioned her on the time frame, she estimated it would be two years before I would receive "permission papers" to buy a home through NACA". Credit scores are not a factor in the NACA program whatsoever. NACA is a character-based lending program that reviews your past two years of financial history to determine how much you can legitimately afford and demonstrates that you can make that payment each and every month without fail for the life of the loan.
Then only ways that it would take two years to become NACA qualified (i.e. "permission papers") would be if you either exited a Chapter 7 bankruptcy yesterday or had literally no financial history of any sort until yesterday. No documents are ever lost in the NACA system since we use an electronic document system in which submitted documents are automatically routed to the member's file. As such, there are literally no physical documents to lose. Additionally, requests to resubmit documents are commonplace in any mortgage program, not just NACA, typically to make it faster and easier for the counselor/loan officer to locate specific documents needed rather than sorting through the dozens of pages in the file.
"He is on his 5th loan officer, starting over each time, since no one has a clue what the previous one had done. He also said that they do a hard pull on his credit each time documents are uploaded, or he gets a new LO, and his credit is now 40 points lower than when he started" are also simply gross inaccuracies.
NACA Mortgage Counselors are on a performance-based pay plan just like any other Mortgage Loan Officer. The typical NACA Counselor makes between $60,000 and $100,000 per year based on their productivity. The average loan officer in the US made $64,000 in 2017, making NACAs compensation plan extremely competitive. It's an excellent opportunity to do well while doing good.
The fact is that the NACA program's below market fixed interest rate, with the ability to buy the rate down to nearly zero, with no down payment, no closing costs and no PMI makes it a truly unbeatable plan, even compared to the CHFA program. And unlike CHFA, the NACA program has no income limits.
The reality behind the NACA program is that it works in Denver and across the country.
Aurora, CO · Member since 2018 · 180 posts · 166 votes
7y
@Tim Trumble the inaccuracies are Naca's representative. I'm stating exactly what I was told at the first seminar. I went with very high hopes. I came away feeling like I'd been to a seminar for a sleezy investor. I have nothing against NACA other than they wasted 3 hours of my time.
I'm not going to debate here, what I was told vs what your concept is. They are NOT the same thing.
Perhaps YOU should come here and attend the next NACA presentation. Not as a NACA representative, but as a potential homeowner. And see just how badly your company was represented.