How Can I Buy a Second Property with Little Money

Question

I currently own a multifamily that I purchased using an FHA loan. How can I obtain another property without having to save for a year or so to meet 6 month reserve requirements and down payment? I unfortunately cannot use my rental income towards my qualification because it hasn't been two years. Looking for some alternatives, and even better if there are any Massachusetts proffessionals on here that have a good alternative and/or possible collaboration opportunities.

Shawn Mcenteer · Answer

Have you created any equity in your current property?  You may be able to move out and owner occupy a new property as long as you have enough equity to refi out of FHA.  Speak with lender but I believe once you have 20 or 25% equity you can owner occupy another property with less then 10% down possibly FHA.

Rob L. · Answer

Hi Devlin,

There's a lot of different ways to acquire additional properties. You can partner with other investors or friends and family to raise capital. That's what I did, once you get some experience its great to share with friends what your doing and see if there interested in making $$.

This site is a great place to learn about owner financing, subject to, etc. All of these are different ways to purchase additional properties.

Massachusetts certainly doesn't make it easy for us with the cost of real estate around here but it can be done.

Good luck, Rob.

Jerry Padilla · Answer

Conventional financing for an owner occupied SFR you can do with 5% down, but an investment SFR requires 15% down.

Shawn Mcenteer · Answer

You  can get another FHA loan you just need to refi out of your existing loan, but yes I believe you must live in for 1 year before doing so.  Have you looked into 5% down conventional mortgages?  whats good about conventional is once you hit a certain equity mark PMI goes away and it it a standard conventional mortgage, additionally you can purchase right away rather then wait 1 year assuming you are able to.

Devlin Harding · Answer

Are there requirements to be able to get another FHA loan? I thought it had to be a change in job location etc...  I've lived in my primary residence for about 10 months

Mike Hoefling · Answer

@Devlin Harding

You can use an IRA or 401k for reserves.

You can buy another primary residence w/5% down payment.

Mike

Jerry Padilla · Answer

@Devlin Harding

How long have you lived in your primary residence? If you have equity built up as @Shawn M. has stated you can refinance in to a conventional mortgage. (75% LTV for a conventional rate and term) and then use your FHA mortgage again, and repeat doing this up to 4 mortgaged properties total as this is the limit for FHA. You must reside in an FHA property for a year or sell it.

Devlin Harding · Answer

I believe I have equity in property but I believe I would have to have owned the property for year ( coming up in April) to refinance where the bank would accept the new value of the home rather than what I paid for it. May be my best option so far.

How Can I Buy a Second Property with Little Money

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