What would you do with a loan pre-approval for 500k?

Question

Hi everyone,

Thanks for clicking on my post. I am a newer investor living in the Bronx, NY area. I currently own a single family out in Allentown that is about 80% done in rehab which i will be renting starting next month. I currently live with my parents and want to move in with my girlfriend but refuse to pay rent. With all the knowledge i have acquired, i want to build more equity and my main strategy will buy and hold.

I recently was preapproved for a 500k loan and contemplating on whether i should expand my portfolio to acquire more units out in Allentown where i bought my first property, where prices are much lower, or focus on finding a 2/3 unit in NY i can house hack to move in with my girlfriend and build equity in the fast appreciating market of the Bronx. I have enough for a down payment for a 500k house, but it will take some time for me to find a multi at that price range and anticipate paying interest rates closer to what a hard money loan seems to be (9-11%). If i buy in NY, i will have a huge PITI payment and will need to get the other unit rented fast. If i use it to expand my rental portfolio, i can pickup at least 3-5 units.

Wondering what others thoughts would be with the given factors. I appreciate you taking the time to read this post and would love any advice or other things i didn't mention here to consider.

Happy investing!

Ceasar Rosas · Answer

@James Perdomo

Not sure why you'd pay 9-11% for a multifamily buy and hold. Are you looking to do this as an investor under an LLC? If you're looking to house hack you can do FHA or conventional financing depending on how much of a down payment you have. You would be putting it under your personal name, but the rates would be more like 5% and make sure you have the proper insurance in place.

My recommendation, if you're looking to be a buy and hold investor, use the house-hacking advantage and purchase a multi to live in. 500k is still doable in the Bronx, but you can also look at places like Yonkers in Westchester. Hope this helps!

James Perdomo · Answer

@Ceasar Rosas

Thank you for your insight. I am also considering Yonkers. And yes you are correct, it will be under my LLC, hence the higher rate. It would take me about another year and a half before i can qualify for FHA or conventional under my personal name. If i do choose to buy in NY, i plan on refinancing the earliest possible for a lower rate.