I hope everyone is doing well, this is my first post to the forum,( hopefully I’m able to post) .
I'm looking to make the leap into REI, I have since been pre approved for an FHA, @ $225,000. so I’ve beeen shopping around For two unit properties and crunching numbers.
I have to say I'm discouraged at times because my purchasing power is low due to the Type of loan I'm using.(FHA ) I've been looking at areas I feel will progress in the next decade.
@Emanuel Rubio - Lots of smart people already commenting on your post. I'd link up with them @Mark Ainley, @John Warren, or @Sarita Scherpereel and you then you already got a good part of your team built. That's the thing about real estate and starting out.....talk to these smart people who have done it before to help you along the way and show you where to look.
If you are looking for maintenance and rent collection needs after you find your place definitely shoot me a PM and I can provide some great technology solutions.
@Emanuel Rubio you should be able to snag a duplex for 225k or so in some of those areas. The other thing is that your loan is probably tied more to the income of the property than your DTI, so if you get one with decent rents you might be able to borrow more. I wouldn't get discouraged! Make sure your lender does 2-4 unit deals all the time and knows the space well. Let me know if you need a lender referral.
@Emanuel Rubio I agree with @John Warren you should be able to find something in that Little Village/Marshall Square corridor. Make sure you are working with a real estate broker that is keeping an eye on things as they come available or make sure you are ready to move as something comes on the market.
@Emanuel Rubio - Lots of smart people already commenting on your post. I'd link up with them @Mark Ainley, @John Warren, or @Sarita Scherpereel and you then you already got a good part of your team built. That's the thing about real estate and starting out.....talk to these smart people who have done it before to help you along the way and show you where to look.
If you are looking for maintenance and rent collection needs after you find your place definitely shoot me a PM and I can provide some great technology solutions.
Yes, you should be able to find something in your price range in these areas. As long as you have an agent that has a record for closing FHA deals you shouldn't have any issues. Especially in these areas.
@Emanuel Rubio, congrats on making the move into house-hacking!!! Excited for you, and it will definitely be worth the challenge. That said, to maximize your purchasing power you absolutely have to work with an agent AND lender that both specialize in multi-family and house-hacking. This niche of the residential market is nuanced and requires experience to really hit a home run. That goes with sourcing the right property and identifying value, as well as a financing strategy that maximizes your dollar. By ensuring both steps of the purchase process are done right, you will make sure you get to the top end of your purchasing power and find the right investment. I recommend reaching out to @Sarita Scherpereel for a conversation to get some tips on the front-end of this process. She's very good at weeding through and identifying the right opportunities, and knows the city well. All the best my friend!
2) Have you spoken to a lender about low money down conventional loans? A huge misconception is people cannot acquire loan low money down unless it is FHA, that is what I thought when I first started.
3) You may be discourage of your purchasing power but right now be extremely grateful for the lending rates, money is super cheap right now which will go a long way for you especially looking back many years down the road when rates likely will go up.
A rehabbed-ish, ish - the rehabs are typically bad- two flat is going for $220ish. At $220K the numbers don't work unless you absolutely LOVE living in those areas and you can call those areas your HOME. The rent vs. purchase price is at less than 1% so you are stuck with a negative cash flow after CapEx. I wouldn't touch that, it's not worth my time.
If you like the condo-liked living situation and don't care about taking all the risk, go ahead, but that shouldn't be called an investment. You are buying a home and that's a consumption choice- not an investment.
The house hacking idea is laughable at today's prices, because the properties don't make sense as investments. If you want to make money on RE this may not be the best option, don't jeopardize your financial future by making that mistake.
My advice is don't do it. Wait until you have at least 10% -15% for a down payment ($20K or $35K) and $10K in cash reserves. Only because those area are the cheapest markets, it doesn't mean they are good investments.
I appreciate your straight forward-ness, definitely a perspective different that of what I have come across.
You’re right I am buying a home, a stipulation of my loan states I must occupy the property for at least one year.
I'm not expecting to make money on my first deal nor would I call myself an RE investor. I'll be happy with eliminating the highest living expense, and gaining some experience in RE and getting my foot on the door using FHA
i appreciate your advice, could you elaborate how that approach might work for me opting for a conventional loan?
I appreciate your straight forward-ness, definitely a perspective different that of what I have come across.
You’re right I am buying a home, a stipulation of my loan states I must occupy the property for at least one year.
I'm not expecting to make money on my first deal nor would I call myself an RE investor. I'll be happy with eliminating the highest living expense, and gaining some experience in RE and getting my foot on the door using FHA
i appreciate your advice, could you elaborate how that approach might work for me opting for a conventional loan?
Excuse my grammatical errors
Hi there,
Yes, I don't see many contrarian posts here. At current prices and with an FHA loan, you will not be able to leave that "home" for a year. You will likely pay more for the unit and your fees will pile up. Interest rates are low, but that pushed prices up - maybe that's what holding this nonsense.
Because of the low down payment and fees, you will be stuck there for a long time, it will take many years until it cashflows. A home is where you will enjoy your life. If you are looking into being there for a year, that's not your home. Is this your home? Recall there are good deals and bad deals. Did you run the calcs?
How to save?
Renting is cheaper than owing a home. Get roommates and save tons of cash. This may be your highest living expense, but it can be controlled unless you chose to "consume" more - fancy areas, top of the line kitchen, garage, fire pit, vs. an apartment. You will never eliminate this expense, you can manage it and complement it but the cost will always be there.
Everything is relative, the more you make the more you will spend
Interview for a different job and hit them hard. Things are only worth what others are willing to pay for them.
Invest in your job. Get credentials, certifications, training, etc.
Save but do no harm.
Create a solid budget.
The best asset you have is you. Invest in yourself first and your career.
Do not accumulate bad debt.
To get better financial education, you need to look far away and outside BiggerPockets. Although there are some good nuggets here, there is also a lot of hype too. They sell dreams, books, advertising, and probably harvest your data. There is a lot of noise. Listen to the first 100 podcasts and posts. Get good books so you can build a threshold of knowledge to filter the junk.
RE seems daunting at the beginning, but the whole thing can be summarized as knowing very simple calculations, understanding a market, becoming familiar with some legalities and taxes, and expanding your skills to manage it.
Look at online financial classes, Coursera has a few on personal finances, Boggleheads forums, read books about index fund investing, personal budgeting, NOLO for RE taxes, etc. PM me if you need book references.
RE can be a good source of extra cash, unless you make this your job. Then, as every job, some make a lot of money and most do ok. Unlike a regular job, some have lost a lot of money.
@Emanuel Rubio Good job stepping up--willingness to learn and staying at it are needed to succeed.
I have to respectfully disagree with @Frank S. on the nature of Bigger Pockets. The reason I'm here is because it's NOT about the hype--the gurus--the "there's only one way to do it" mentality (by and large). Yes there are resources available, but it's not a "pitch fest" like so many REI "networking opportunities" are. There is good stuff in other places, but apparently I've had a completely different experience here at BP. (Just look at this thread and see all the people giving good advice without an expectations.)
GC Realty & Development LLC4.61090 Reviews
House Hacking New Jersey563 Reviews