To Utilize First Time Homebuyer Program or Not

[Alexander Zurn]

Hello - I have been looking into the Multi-Family market in Rhode Island the past 6 months. Live in 1 side, rent the other, have it pay for the mortgage. Easier said than done of course, but at the price I want, it's just not feasible right now.

I have switched my focus (while still watching the overall market) to strictly an investment property. Put 20% down, rent it out, and cash flow. Again, easier said than done but there are some deals out here at the price points I am looking for.

My question is: Do you think I should give up the obvious benefits of a First Time Homebuyer Program (i.e. help with closing costs, 3.5% down, tax credits among a few) in order to put 20% down on an investment property? I have a private money lender where I could still put between 3-6% down, fund the remaining 14-17% and start cash flowing as soon as I get tenant in.

Specific property notes: Condo, 2 bed, mortgage between $700-$800 and average 2 bedroom rent in area is $1,000-$1,600 (Conservative - Max).

Let me know what you think!

[Anthony Thompson]

Alex, it's hard to turn down free money in general. But you're right that from an investment point of view it's also harder to make an owner occupied work as an investment (usually because the acquisition cost is higher because you're competing with other owner-occupants who aren't really looking at it as an investment).

With the place you would personally have to live for a few years (for the First Time Homebuyer Program), you also need to take into account, do you want to live in that particular house for X years, and do you want to live right next to your tenants? (To put it more starkly, if you had to evict someone, would you want them to know where you live?)

I think the important thing is to buy something, whichever one (partly owner-occupied or pure investment) works best for you in terms of #s and other factors (location, living next to your tenants, etc.).

A portfolio of 1000 units begins with a single first purchase... Or, like pulling a monster truck, the hardest part is getting started. So: Just get started!