I am very naive when it comes to taking advice. I am just starting out in real estate still learning l, haven't bought any properties and I'm not ready to yet. BUT what I was planning on doing was getting an FHA loan and house hacking within 2 years. However, I just read on Instagram from this real estate investor that he recommends putting no less than 20% down on any property and does not recommend an FHA because of PMI and if the market goes down it will be hard to get cash flow so now I am having second thoughts on an FHA. Could some experienced people please give me some advice?
@Eric Stugart When you analyze the deal you would need to factor in PMI into the monthly costs and if it still makes sense with that factored in, I would go for it and let the tenants pay it down. I have a FHA I put 3.5 down on previously and the PMI came out to about 95/mo on a 150k note. You would obviously cash flow better without it, then again you'll cash flow even better if you put 100% down... it's not easy to scale if you're putting 20-25% down on every property you want to acquire. Good luck!
See if you qualify for a 3% down conventional loan with PMI. The rates will look higher but the private MI is based on your credit profile and will drop automatically with 20% equity in the property. Find a lender to walk you through your options before you make decisions.
@Tammy Shurts Bjorge thank you so much!
@Daniel Vandenbos thank you so much!