CPA & Investor · New York, NY · Member since 2017 · 1k+ posts · 1k+ votes
Hey guys,
My intended avenue of investment is buy & hold (multi-family units), but I don't have the capital currently to jump right into that type of investment given the prices of multi-family homes in Rockland and Westchester counties (New York).
I know that a fix and flip would yield some up front cash, even after taxes, but I have no experience with flips, nor do I have a network of trusted subcontractors or even a trusted GC. It's daunting to get a loan from a hard money lender without the experience or network to execute a seamless (more or less) flip.
On the other hand, the BRRRR strategy seems to align more with my overall goals, although I still face the problem of being a newbie to rehab projects.
Either way, hard money loan & other holding costs add up QUICKLY, so I'm trying to soak up as much knowledge as possible before embarking on the journey.
Has anyone been through the same experience/arrived at the same crossroads?
Thanks in advance for the help and advice!
New York City, NY · Member since 2017 · 20 posts · 29 votes
9y
Just in case you don't know this - have you considered an FHA loan? Only 3.5% down for owner-occupant and a portion of prospective rents in the subject property can be counted as your income.
Investor · Burbank, IL · Member since 2017 · 49 posts · 21 votes
9y
Just remember the FHA loan is for owner occupied 1-4 unit buildings. Also remember, most banks will not refinance 5+ multi-family buildings. My credit union will refinance only up to a 4 unit multi-family building.
As mentioned above, up to a 4 family you can use an FHA loan and receive up to a 6% sellers' concession to cover closing costs. Ex. on a 500k property with closing costs built in your out of pocket for down payment would be 17,500. You would need to have money for 3 months of reserves in an account, but that can be in a retirement account. You can use an FHA 203K for something that may require renovations. If you have prior military by any chance you can use a VA loan. If you're still working on building the funds, I would take a listen or read the new book by @Scott Trench Set for life. It is a great layout on how to build that savings and start the multifamily buying process. I'm half way through it on audible. I used this method for a 2 family I bought prior to listening to this book. I wish it was out then.
CPA & Investor · New York, NY · Member since 2017 · 1k+ posts · 1k+ votes
9y
BB Liu Paul Staszel Ceasar Rosas
Thanks for the input, everyone! I should have clarified in my original post - I just purchased a condo in which I currently live, so owner occupied is out of the question for right now. I believe that eliminates me from both an FHA and a 5% conventional loan.
Ceasar Rosas - I will definitely give that book a read. Thanks!