Hey Bp, Good Afternoon. Hope Everyones Having A Successful Day. I Have A Question....
I Came Across A Potential Deal That If Purchased Will Have Built In Over 90k In Equity. But Doesn't really Cash Flow Until the 3rd Year Of Ownership Based On The Financing I'm using. Im Pretty Much Breaking Even On The Cash Flow Side of Things. I Plan To Use A FHA Loan To Fund the Deal With No Additional Repairs. The Property Will Be A SFH and Already Have a tenant That Is Interested in Renting.
Would Investing Into A Property Based on Equity & Breaking Even on Cash Flow A Smart Idea?
For a SFR you want to be sure you have at least six months of reserves in the bank in case you have a non-paying tenant. This is not money you would use if you need to replace a hot water tank. Also, 90K in equity over three years would be relatively meaningless on a million dollar property. Can you give more details on the financials? If you're talking about a $300K property its a different story.
You can't finance a SFR with FHA and rent it out. You have to live in the property for a year as an owner occupant to obtain financing with this route. You could purchase a multi-family and live in one unit, while renting out the rest and cash flow this way with an FHA mortgage.
BUY it thats the best way for you to create an asset and built an estate
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@Rob Beland Thank You For Your Response & I Agree On A Million Dollar Property 90k in Equity wouldn't make Sense. But the Home Is in The 400k price Point. Nevertheless I Will Have A Partner I'm Working With on This Deal & Should Be Able To Manage If Tenants Defaults on Rent. We had Plans To Use A Hard Money Lender for Our Downpayment. The Home Is Currently Permitted as a 2 Family Home But Figure would Be Easier To Rent Out As A SFH.
@Jerry Padilla Thank You For your Response. I Actually Didn't Know That about FHA loans But Even So It's Actually Currently a 2 Family Home. Just thought would Of Been Easier to Rent out By turning It Into A SFR. That Changes How I Look At This Deal.
@Jacobus Bor thank You For Response.. looks Like It Would Def Be A Good Start.
Absolutely anytime. I am always glad to answer any financing questions and help you come up with ways to accomplish your goals.
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