Updated almost 7 years ago on . Most recent reply
Financing Options for First Duplex
Hi Everyone,
My roommate and I are looking into moving down to Austin, TX this coming year from Boston, MA. We are planning on purchasing a duplex down there and house hacking. We’ve been networking with local investors, lenders, realtors etc. to gain as much knowledge about the market as we can. We’ve talked to a few lending specialists to narrow down savings goals and see where we need to be financially in order to get that first property. We’re considering renting initially to get used to the market and learn the city prior to purchasing, but if we find a deal why wait???
I haven’t posted on BP about this yet but I wanted to get some perspective on the different options we’ve been presented with.
To give you an idea of the numbers we each make between 50k-$60k/year and were looking to purchase a duplex around $300k.
One lender told us that we would each be able to qualify for an FHA Loan on our own given our current financial positions. This would allow us to purchase another duplex the second year if the other roommate applied for an FHA loan opposed to both of us applying for the first mortgage. I liked this approach personally and hadn't considered that we'd each be able to qualify on our own.
Another lender had told us that we'd only qualify for a $200k home on our own (they didn't factor in rental income) and $400k together. Again, the only problem applying together would be that we can't use the FHA on the second property.
I hear a lot about the FHA 203k loan on BP but after discussing this with one of the lenders they did not recommend it. That was our initial inclination to get into a property but now I'm second guessing it.
To get into a duplex the first year using the FHA loan as a solo applicant and the other applying the following year seems to be the best option for us at this point, but I wanted to hear from the rest of the community to get your thoughts. I also plan to document this journey from getting into our first property and beyond and sharing with the BP community.
I appreciate the feedback!
-Craig
Most Popular Reply
@Craig Moreau I would suggest renting initially to understand the market. Also, traffic is a beast in the Austin metro. Me, personally, I wouldn't want to commute across town for work. Been there done that when I worked at Dell in Round Rock and commuted from my duplex in south Austin back in the day. Trafffic can get really gnarly. The other day there were boulders that fell on 2222 which is the only real thoroughfare going west. If you lived along 620 in a very nice area and you happened to be working downtown then that commute would have taken you a couple of hours to get home. No thanks! There are very good buy and hold opportunities throughout Austin. A 6 month lease is more than adequate. Btw, I have a nice 2 bedroom 2 bath condo townhome with granite counters, bamboo wood floors,etc. on manchaca, 78704 that I am trying to lease for $2100 but its a 12 month lease : )
Btw, I would do the 203k loan. I have used a number of times and its the cheapest way to buy a fixer upper from the loan perspective. It can be onerous from the mortgage broker side and also the real estate agent/broker's side but I would totally do it if I were you. If you can't find a mortgage broker that is willing to do it then let me know. I know many that will do it.