Tips for first time single home loan

2 Replies

Hello all, 

I am new to the real estate niche and I had a question regarding my first investment. I would like to buy a single family home to rent out. I have 10k saved. what is the max loan limit you’d suggest for my first property? Would you suggest only doing 2x what I already have, leaving me with a 20k loan or is that not enough to get a decent property? Also, if you went the route of a single family home as your first property, then how much was the house? Also, how long did it take for you to pay that off and move on to the next property? Or did you buy multiple with multiple loans at once and are currently paying those off?

Thanks in advance! 

Hello @Danarsha Johnson , I hope you have done your research on investment property, most importantly the math behind buying this rental property. If you are going for a loan typically the banks require 20% Loan to Value which means for your 10K + Closing cost, you can buy a 50K property. How expensive of a house you can buy really depends upon the rent you receive, the expenses to hold the house and the cash flow you expect. You should back in to the home value based on your expectation, there are number of online calculators including ones in bigger pockets where you can do this. As far as paying off the property again it is a personal preference, (obviously your loan principal is being paid off monthly) there are two schools of thoughts 1) Pay off the loan, no more loan servicing and more of the rent in your pocket 2) Pay off the first loan, means you are not saving for a down payment on second property. What is good for you is  based on the math and personal preference. As long as you are financially strong and your first property is performing well you can get a bank loan for up to 10 properties under your name!!! or you can establish a relationship with commercial loan dept of a bank then the possibilities are endless.

In my case my ROI is much higher with loan than without the loan and I also believe having a 4% / 30 year fixed loan itself is a big value (imagine I will be paying the same mortgage payment in 2045 as today).

Good luck

Originally posted by @Danarsha Johnson :

Hello all, 

I am new to the real estate niche and I had a question regarding my first investment. I would like to buy a single family home to rent out. I have 10k saved. what is the max loan limit you’d suggest for my first property? Would you suggest only doing 2x what I already have, leaving me with a 20k loan or is that not enough to get a decent property? Also, if you went the route of a single family home as your first property, then how much was the house? Also, how long did it take for you to pay that off and move on to the next property? Or did you buy multiple with multiple loans at once and are currently paying those off?

Thanks in advance! 

 Welcome to the site. When purchasing non owner occupied properties you will be required to put down 25%. Thus the max you can afford is a $40k home right now. You can find some lower end C-D class stuff in the Midwest with this amount. However for your 1st investment might now be a bad idea to save just a little more & move yourself up to the $60k range. You'll only need another $5k & then you can buy some 1950's built bungalows in better neighborhoods. Provides for a smoother ride.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633

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