Please Wisdom and advice! Pittsburgh Pa

8 Replies

Question. I am Looking to possibly house hack a duplex in my area. I live in Beaver Falls PA about 40 mins north of Pittsburgh. The asking price for the duplex is 40,000 or best offer presented. I haven’t physically walked through the house but i know from talking to real estate company there will need to be repairs in the vacancy apartment. I am literally starting with 0 dollars. What is the best course of action going with an FHA loan? private lender? I want to profit more than owe after moving in? But starting with no money I’m not sure the best route to take??

@Tonette Whitted For a property that needs work like the one you are talking about you could use a FHA 203k loan which lets you wrap the renovation costs into the mortgage, minimizing your out of pocket expenses. You can also ask for up to 6% of the purchase price from the seller to put towards your closing costs. FHA loans also let you use "gift funds" from family members towards the down payment and such if that is a possible option for you.

Jeremy Taggart, Real Estate Agent in PA (#RS340668)
724-841-1392

I'm going to echo Jeremy on this in saying that a FHA/203(k) loan is the best way of approaching this. Or if the property is paid free and clear, attempt the seller financing tactic.

@Tonette Whitted Great job on taking actiona and looking at properties! In my humble opinion I think unless you can get some money from family I would save up as much money as you can to use as a down payment or for repairs. You always want to have a cushion just in case. However I am assuming that you really do have nothing which is makes it very hard to get stuff done not saying it's impossible. You don't necessarily have to use your own money but it is much harder to do deals with absolutely no money unless you know people and are a great salesman. Good luck and keep grinding!

Originally posted by @Jeremy Taggart :

@Tonette Whitted For a property that needs work like the one you are talking about you could use a FHA 203k loan which lets you wrap the renovation costs into the mortgage, minimizing your out of pocket expenses. You can also ask for up to 6% of the purchase price from the seller to put towards your closing costs. FHA loans also let you use "gift funds" from family members towards the down payment and such if that is a possible option for you.

 Yes and I've been reading about 203 K Loans in Brandon's book, so that could be a route I would go. I'm still filtering through everything being very careful lol :) Thank you

Originally posted by @Paul Gospodinsky :

I'm going to echo Jeremy on this in saying that a FHA/203(k) loan is the best way of approaching this. Or if the property is paid free and clear, attempt the seller financing tactic.

 I think I will talk to the seller personally, it seems she's lived there a long time and older, so I think she is motivated to sell... So we shall see... Thanks so much. 

Originally posted by @Michael Guzik :

@Tonette Whitted Great job on taking actiona and looking at properties! In my humble opinion I think unless you can get some money from family I would save up as much money as you can to use as a down payment or for repairs. You always want to have a cushion just in case. However I am assuming that you really do have nothing which is makes it very hard to get stuff done not saying it's impossible. You don't necessarily have to use your own money but it is much harder to do deals with absolutely no money unless you know people and are a great salesman. Good luck and keep grinding!

 Thank you that's the honesty i need to hear. That's why I've been weighing giving it a few months, attempting the wholesaling option as well while I'm just beginning my new job this month. So there are options for money, just the waiting process will be a little longer than i want. But thank you :)

@Tonette Whitted

If you have good credit and decent income you can look into a personal line of credit at a local bank. 

You can get some money that way, but for the first one you might want to keep the rehab as strictly cosmetic as you can. That way if your budget gets stretched you can take on some of the basic repairs yourself. 

FHA 203k is a good way to do it, but if you want to save money buy doing some basic work yourself like painting (which if you don't have decent reserves you should try to) you may consider buying FHA after you save up some money and then using a line of credit to pay for materials. If you use a 203K loan you will need to have a contractor hire out everything that is needed as part of your scope from the FHA consultant.

Getting started with low money down is great and I think that you should do it BUT buying any house (let alone an investment) with no financial reserves is risky business. You want to have some money set aside in case the furnace needs to be repaired, roof leaks, etc. 

Remember the cost of the project/property doesn't end with the initial rehab when it's a rental. You'll want to save up at least a few 1000 dollars before you get going that you won't be putting into the rehab. 

Just my two cents. 

Anthony Angotti, Real Estate Agent in PA (#RS335936)
(412) 254-3013

There are options in your situation however, with no money, you are taking on a level of risk that may be well beyond your skill set.

If you are not able to save money now you will struggle keeping your head above water investing in a negative cash flow property.

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