Looking to house hack a 4 unit with fha loan need help in nj

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Looking to house hack a 4 unit with fha loan need help in nj

Account Closed
Paterson, NJ · Member since 2016 · 119 posts · 18 votes

Hello everyone,

im 24 i have debt monthly expense is 280 to 350 a month, i have 140k cash and credit score is 776. I want to buy a 4 unit home in nj around north jersey to do fha loan 3.5% and rehab it with a 203k loan and then refinance and rent it out. I dont know where to look for 3 or 4 unit homes, should i contact a realtor or any good website out there? i also just started a new job i have a business should i wait a few months before i begin to get a preapproval letter. can anyone help me?

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Ray Harrell
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
9y

I already have an FHA property. Can't use that one again. Unfortunately, I'm the richest person among family and friends, and I'm poor! I'm trying to change the cycle of poverty in my family.

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  • Logan AllecBusiness Member
    Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
    9y

    @Account Closed, smart move. Your numbers sound roughly close to where I was when I purchased my first investment property, which was a 4-unit here in the Los Angeles area that I purchased with FHA financing. After a failed direct marketing campaign, I eventually found the deal on Redfin. I would say to start looking for both realtors and lenders in your area here on BP. Make sure they're responsive and make sure you educate yourself on the FHA rules. Good luck!

    Clarita CPA Group516 Reviews
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  • Kevin Hill
    Real Estate Agent · Hackensack, NJ · Member since 2014 · 321 posts · 412 votes
    9y

    Mario, you can search on the local MLS's for 3-4 unit homes to get an idea of prices and what towns offer 3-4 family homes. Try gsmls.com & njmls.com.

    I would go get a mortgage pre-approval so you know how much you can qualify for.

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  • Account Closed
    OP
    Paterson, NJ · Member since 2016 · 119 posts · 18 votes
    9y

    @logan allec   thank you, and whats redfin? and yeah will do

    @kevin hill   yeah i did but im trying to find a deal where i can add in some value get a foreclosure and rehab it.  its hard to find 4 unit homes because of not enough supply, i will check those sites out. I was pre-approve for $400k

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  • Ray Harrell
    Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
    9y

    I love some of these posts. I wish I had $140K cash to buy property. I wouldn't sink it all into one property. I would spread it out over a few properties. 3.5% for that first FHA "owner occupied" (you gotta live there), and then 20% on 2 or 3 other properties with conventional loans.

    I'm still looking for someone to inform me about how to get into additional properties when someone doesn't have $140K in cash. Just a regular working guy here trying to build something for myself.

    1Reply
  • Frankie Woods
    Investor · Arlington, VA · Member since 2012 · 1k+ posts · 491 votes
    9y

    @Ray Harrell, a 200k loan at 3.5% (read FHA) is only 7k. It shouldn't take you too long to save up for that or ask family/friends to help out. There are a tons of ways to skin the cat in RE. I would highly recommend @Brandon Turner's book on "Investing in Real Estate with no (or low) money down".  Fantastic advice for finding ways to pick up deals.  Owner occupied, Subject to, and Lease-options are my favorite so far.  Good luck to both you and @Account Closed!

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  • Ray Harrell
    Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
    9y

    I already have an FHA property. Can't use that one again. Unfortunately, I'm the richest person among family and friends, and I'm poor! I'm trying to change the cycle of poverty in my family.

    3Reply
  • Joseph ScoreseBusiness Member
    Banker · Philadelphia · Member since 2009 · 2k+ posts · 637 votes
    9y

    Hi @,

    Welcome to BP!

    You would have 12 Months to refinance in a FHA Loan whether 203K or B.

    Follow the train stations along NJ Transits. Transportation equals jobs and paying rent.

    You would need two months of current pay statements.

    Let me know if you have any questions.

    Regards,

    Joe Scorese

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  • Upen PatelPro Member
    Lender · Nationwide Lender · Member since 2015 · 1k+ posts · 814 votes
    9y

    Hi! @Account Closed As long as your new job is in the same field as your previous job, you don't need to wait. You can get going right away. In fact income from the other units can be use to qualify you.

    [email protected]571-200-6180
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  • Albert Bui
    Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
    9y
    Originally posted by @Upen Patel:

    Hi! @Account Closed As long as your new job is in the same field as your previous job, you don't need to wait. You can get going right away. In fact income from the other units can be use to qualify you.

     Thats true Upen but its good to note that generally only the base or salary income can be used for qualification with out any waiting periods assuming the same industry.

    Using bonus/overtime/ auto reimbursement/commissions from a prior job will be hard to carry over unless it was a near identical position in the same industry like car sales man at chrysler to car sales man at a ford dealer or retail sales at AT&T to retail sales at Verizon Wireless.

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  • Albert Bui
    Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
    9y
    Originally posted by @Account Closed:

    Hello everyone,

    im 24 i have debt monthly expense is 280 to 350 a month, i have 140k cash and credit score is 776. I want to buy a 4 unit home in nj around north jersey to do fha loan 3.5% and rehab it with a 203k loan and then refinance and rent it out. I dont know where to look for 3 or 4 unit homes, should i contact a realtor or any good website out there? i also just started a new job i have a business should i wait a few months before i begin to get a preapproval letter. can anyone help me?

     HI Mario,

    Just a few pointers that might help on your search:

    - Freddie Mac Home Possible program allows 5% down conventional financing with reduced MI allows for a lower amount of mortgage insurance coverage there by reducing your MI cost. This program is comparable to FHA since it allows up to 2-4 units with 5% down as well. This is a big difference since regular conventional financing requires 25% down on 3-4 units and FHA requires the self sufficiency rule to use FHA financing.

    - no need for FHA self sufficiency rule which usually stops a lot of 3-4 unit purchases with FHA in high cost markets. The deals that meet the 1% rule usually can get past the SS rule with FHA.

    - Success tip for 203k loan is to get a full pre-approval first not just for your acquisition price but to assuming a larger than necessary rehab cost into your calculations too like using 150k rehab when you may think you only need 110k. This way you'll have a nice buffer of qualification in the event you find a property that is a bit higher or if the seller or escalation clause in your offer requires you to go higher than you had anticipated.

    - on 203k loans make sure your loan officer connects you with a local HUD consultant who can review the property to let you know the min required repairs that will be required by FHA so that you can decide your "wants," and "must haves," and find a fine balance in between the two to arrive at the highest and best use of your proposed purchase

    - 3-4 units with FHA also need 3 months of reserves

    - 3.5% down payment is 3.5% of the total cost which could consists of purchase price + reserves + inspection fee's + rehab costs + closing costs + prepaid interest up to 6 months.

    The cool thing with 203k's are that you can use the ARV rental income with the after improved property as well so in a way 203k FHA's have an easier time meeting the self sufficiency rule with FHA 3-4 financing since regular FHA financing on 3-4 units without 203k will have to use the lower of current rents or market rent.

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  • Satha Palani
    Investor · Newark NJ · Member since 2012 · 104 posts · 61 votes
    9y

    @Account Closed on connecting with a HUD consultant

    good luck

    0Reply
  • Ned Micic
    Wayne, NJ · Member since 2016 · 23 posts · 4 votes
    9y
    Mario, its nice to see someone else my age getting into the real estate / investment game. I am a licensed realtor in North Jersey and myself own a multi fam investment property in Paterson. If interested, I can give you advice or even help you purchase your first investment property.
    0Reply
  • Johnathan Boyle
    Real Estate Agent · Belleville, NJ · Member since 2015 · 408 posts · 94 votes
    9y
    Mario Gonzalez if you need recommendations of lenders in your area, I have a few. Not to mention, I'm working with a client in a very similar situation as you and showing some 3-4 family homes that he plans to do a 203k loan with.
    0Reply
  • Adrian Samborowski
    Investor · Spotswood, NJ · Member since 2015 · 39 posts · 3 votes
    9y

    @Mario Gonzalez i did the same thing you want to do last year. Use the FHA or the 5% down loans to buy your first property. In NJ don't go lower then 4 units. Look for properties in the 400K price range that rent for $1200 and don't need any rehabs. Talk to @Joseph Scorese about financing options, he is really good at what he does. After that you can keep adding one four family building every year using the low down payment strategy or move up to apartment buildings. PM me if you need anymore info.

    Joseph Scorese

    Joseph Scorese

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  • Account Closed
    OP
    Paterson, NJ · Member since 2016 · 119 posts · 18 votes
    9y

    @Adrian Samborowski   where did you find your property? and im looking for smaller banks for financing but thanks, 

    @Johnathan Boyle where are the locations for the homes? yeah i was looking to do smaller banks for a lender its all about creating good terms in the deal along with prices.

    yeah got to in this world and im planning on buying a mf for my 2nd investment property in paterson but not my 1st @Ned Micic

    yeah i know FHA will have to use my 1st unit as primary residence i know that and cause 4 is better than 3 lol but yeah 3 works too, yeah your right 203k broker but what are the fees for the broker? and where do i connect with a hud consultant?

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  • Account Closed
    OP
    Paterson, NJ · Member since 2016 · 119 posts · 18 votes
    9y

    @Albert Bui yeah my old job is a bank and new one bank different roles but i might be getting a better job very soon so i dont know what will help in this case. as i have a business and 2 years return but this year returns i put less so i can save on the taxes to pay, so thats why im wondering if i should wait or not. 

    0Reply
  • Naeem Boucher
    Investor · Paterson, NJ · Member since 2015 · 71 posts · 22 votes
    9y
    Mario, I'm a realtor in the Passaic county area. I'll be more than happy to help you with your first investment. I'm in the process of doing the same exact thing as well.
    0Reply
  • Account Closed
    OP
    Paterson, NJ · Member since 2016 · 119 posts · 18 votes
    9y

    @Naeem Boucher thanks but I'm looking for more of deals, not regular MLS I need something I can add value to and have equity when I 1st buy to start so I need foreclosure type of 2-4 families.

    0Reply
  • Naeem Boucher
    Investor · Paterson, NJ · Member since 2015 · 71 posts · 22 votes
    9y

    I can help with that might be able to send over a few short sales, banked owned or auction properties. 

    0Reply
  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    9y
    Originally posted by @Ray Harrell:

    I already have an FHA property. Can't use that one again. Unfortunately, I'm the richest person among family and friends, and I'm poor! I'm trying to change the cycle of poverty in my family.

    Who told you "Can't use that one again"? FHA is NOT just for first home buyers! If you already have 20%+ equity in it (quickly achieved in a rising market), you could refi out of that loan and apply again, once you're OK to move. Many use this strategy. All the best (for your family too)...

    0Reply
  • Account Closed
    OP
    Paterson, NJ · Member since 2016 · 119 posts · 18 votes
    9y

    @Naeem Boucher yeah send them if they are 3 to 4 family cause i will be using a fha loan and 203k. 

    0Reply
  • Naeem Boucher
    Investor · Paterson, NJ · Member since 2015 · 71 posts · 22 votes
    9y

    Add me on Facebook or Instagram just In search my name then we will exchange info there

    0Reply
  • Johnathan Boyle
    Real Estate Agent · Belleville, NJ · Member since 2015 · 408 posts · 94 votes
    9y

    @Account Closed It depends on which client. I have one looking in Paterson for his first investment property, another in Newark. As far as smaller banks, I have one I have been using for one client that I know the son of one of the managing members of the bank. 

    0Reply
  • Harjeet BhattiPro Member
    Lender · Glenview IL- CDLP NMLS#230554 · Member since 2015 · 2k+ posts · 747 votes
    9y

    You should have 2 years history in same line of work. There are some other factors also count in to get mortgage pre-approval. You can talk to any local lenders who are good in 203k loan. Your MLO and their staff should be good in this loan process  so they can walk you throughout the process. 

    0Reply
  • Account Closed
    OP
    Paterson, NJ · Member since 2016 · 119 posts · 18 votes
    9y

    whats the bank? i heard to go to smaller banks for better terms @johnathan boyle

    @Johnathan Boyle 

    @harjeet bhatti   yeah i own a business i have 2 2 years of and a salary letter from my new job

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