Professional · Bradenton, FL · Member since 2017 · 37 posts · 6 votes
Hi everyone!
I am currently am ready for another investment, I currently own a duplex in which I live in one side and rent out the other which covers all my living expenses .
Right now I have about 90k in equity in my duplex, another 90k in cash and a 760 Credit Score.
So far all of my financing options require me to put a 25 percent down payment on a second investment property with about a 4.7 percent interest rate which leaves me little room for MY NOI.
So my question,
Is there a way for me to put less than 25 percent down with a lower interest rate? I've also heard of cash out refinances which would give me a way to put zero of my cash down but I am uneducated in this area.
Additionally, I have also looked at the option of a FHA construction-to-perm loan with 5 percent down and 3.5 interest.
So building a Quadplex in high desired area where rent is high, however, I am uneducated in this area of construction financing.
@Nick Watkins is right. I would house hack for the next multi family property. Use FHA for the 3.5% down option and live in that one until the next opportunity comes up. @Jonathan M., are you looking in Bradenton or somewhere else?
Jonathan Masiello A couple of things:
1.) I'm not sure how a down payment or interest rate would impact your NOI. You service your debt with the NOI. Maybe I'm missing something there.
2.) Others may disagree but I'd look at new construction as an entire different value proposition that buying to rent for cash-flow/appreciation.
3.) I know that using other people's money is great for leverage but it doesn't hurt to have a lower mortgage (25% down as opposed to 5% down), more actual cash-flow, and a cushion in case there's a market pullback.
4.) Is there a specific deal you have in mind where your current ability to do a downpayment doesn't cover 25%?
Stephen David Smith Jr. I seen your comment for second home. I bought my current home with FHA loan just 8 months ago. How is that can work if I buy another house with FHA loan and use it as investment?
Do I have to live on it or I can fix it and sell it by the way?
Thanks
I would be happy to clarify it wouldn't be an FHA but would not require the down payment that an investment loan would take. Feel free to message me and we can speak further on this.
Thanks for the comment, I am trying to jump into the houses investment but still education myself, too much to learn.
As far as know if I get a 2nd home from FHA I have to live on it at least for a year.. I guess I will work on my own house and modify it and make it a beautiful and sell it then go from there. Also in the mean time I can payoff my credit debit and my cars too. What you think?