Newbie Questions
I just found this forum and am so thankful I did! Have much reading to do tonight. Two questions for the experienced.
I have been wanting to purchase a rental property for some time now. Something small, no major work, tenant-occupied, etc and have found 2 properties that interest me. I don't know about the different types of financing/creative financing etc that are out there- I'm an "old school" person- used to conventional lending etc. Anyway, the properties that I've been eyeing are below $100k purchase price. Tenant occupied, "rehabbed", etc. I have 2 preapprovals in place, everything is looking good with the bank. However, I'm required to put down 25% down payment, plus show reserves. I'm finding that I'm coming up short on the down payment because most of my reserves I planned on using to put down for the downpayment- leaving me with 3 month's worth of "emergency funds" whereas the bank wants to see 6 month's worth. I have crunched all my numbers and I can certainly afford this and I'm debating between waiting 4 months until I have enough to cover down payment and reserves OR looking into a loan for down payment because I don't want to let one of these properties slip by. I'm looking for recommendations/advice on what the best course of action is. I appreciate any and all help.
Along with this, can anyone explain the FM Homepath Program briefly to me?
Thanks so much!
Antonia -
You don't want to over extend yourself or get in over your head. You say that you found 2 properties that interest you. Why don't you just pursue 1 now, save for 6-12 months, then buy another? These 2 deals you have might be great, but there will be more deals down the road.
I know the feeling of wanting to take action NOW when a good deal comes to your lap, but patience is important in this business.
Hi Scott!
Thanks so much for your reply! I wanted to clarify- while I have found 2 properties I am only interested in pursuing one of these. I crunched the numbers and while both could be done- I only wish to start with one. This would be my first and I'm just looking to "get my toes wet", learn through this first rental purchase and hopefully one day when I feel I'm ready grow from there. Both my husband and I work and both bring in income but I am crunching my numbers and doing this solely on my income/debts alone- this way I am assured that I can afford this. I suppose my question should have been geared more towards "has anyone used any type of creative financing or alternative financing options when it comes to the down payment portion?" in order to purchase a rental property? The purchase price is so minimal that interest rates, etc, barely put a dent in the pocket so I'm comfortable financing while using most of any potential rental income to just put back towards the mortgage to have it paid off in a much shorter period. However, I think that if things were this "easy" or "easily able to be creatively financed" then why wouldn't everyone do it? Why would this one property just be "waiting for me to purchase?". Anyway, Scott, I appreciate your feedback and reply to my post!
All the best,
Antonia
