What type financing for beginners?

Question

Hello

I plan on acquiring my first multifamily investment next year, and my business partner and I are looking for 2-4 units with added value in Boston or outside of Boston. We are new to this so what type of financing are out there? for newbies and how do I learn about theses options?.

Abou C. · Answer

@nathanBrooks Thank you for the information. My business partner and I just finished our 40hrs required to get our sales license in Boston, which is where we plan on moving too. We want to become agents to learn and earn as well. Plus it will give us better perspective as investors and landlord.  We do not know how we will accomplish it all but one thing for sure it will be next year and money won't EVER me the reason we do not succeed in life or this business.  I love this site very support.

Abou C. · Answer

for FHA how long would be the stay?. And yes We will start with a 4 unit small multifamily in Ri. There is many colleges and up and coming communities after home work is done on the area.

Tyler Mills · Answer

In the 2-4 unit range you could also look at FHA financed properties and assume the existing mortgage.  With rates up a little since the bottom you can find a good amount of FHA multi-units where the mortgage rate is under current rates.  In the long run this could save you a significant amount of money vs conventional financing due to the lower monthly payments.  FHA lending requires owner occupancy though, so if you purchase a 4 unit, you or your partner would have to occupy one of the units.

Nathan Brooks · Answer

@Abou C. yes ... make sure you just plan for the 20% down, and reserves required.  Spend some time with your financing person before hand so you have a great understanding of what they need before they need it.

Work with a great realtor so they can walk you through the acquisition process, and have a clear picture of what else you will have to come out of pocket with once you have purchased your property.

Good luck, sounds like you are on the right track!

Don't be afraid to say no to a bad deal, and don't be afraid to pull the trigger on a good one!!!

Abou C. · Answer

Thank you guys the information, yes 20% if what i want to put down for my first investment.

Jon Holdman · Answer

Conventional financing for investment property is your cheapest option and is available.  Typically 20% down, though I've heard of 15%.  You and your partner will have to qualify.

Nilesh Makhija · Answer

@Abou C. - there are HML, cash advances, HELOC, raising from friends and family. The question is what are your exit strategies. If you do not  want money for long term you can borrow high interest rates for short term. But for longer terms you may have to reach out to portfolio lenders, credit union banks and discuss how can they help you

Also local investors can recommend few lenders.