I live in one of the most expensive areas of the US, NYC. I am planning on buying a house in the Bronx and as you know: IT IS EXPENSIVE! The good news (maybe) is that NYC has many programs that allocate juicy help with grants and 0% interest loans for downpayment and closing costs. With that said, I can potentially end up putting very little money down from my own pocket for my first home. My concern is that most of these programs lock you up this property since you have to stay in there as your primary residence for 10-15 years, which in other words, this means that I would not be able to use an FHA loan for that time or any other type of loan that might have a "primary residence" requirement in it. If I move my primary residence somewhere else, I would have to return back a percentage of the grant, depending on how long I've lived there. This implies a large downpayment for future investments since I won't be able to use any owner-occupied loans and that's exactly what I am trying to avoid in the beginning of my career as an investor. Is there a loophole around this? Has anybody gone through the process? How did it go? Should I not take this grant at all?
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When I decided to look into investing in real Estate I looked into these grants.
I looked in the tri-State area for properties and made a decision investing in my local area wasn’t the best option for me.
What deter me from these grants/programs were all the restrictions. Pretty much as you know your investment property needs to be your primary residence. I thought maybe I can do it once what would I do for my 2nd property? Plus I was in no rush to move and the idea of my tenant being my neighbor I wasn’t too thrilled about.
I started looking in different States and landed in Charlotte. Being an out of state landlord is challenging but I don’t regret it.
Started 2 years ago and now I have 3 properties in NC with good cash flow, I have no regrets.
Here’s my 2 cents, if you plan just to buy 1 investment property and hold on to it for long term these grants/programs might make sense but if you want to grow and buy multiple properties will these grants help you to achieve your goals ??
@Raul R. Thank you! That's exactly what I thought, and I came to the realization that having these grants on my first investment do not meet my financial goals due to the restrictions.
It's tough to use these grants to buy a home, especially in the Bronx. Any low or no money down scenarios are getting more and more tough to get accepted. This is mostly due to high competition in the Bronx. It may be better to go FHA and have less restrictions. You can refi out of it in a couple of years and use it all over again.
@Ceasar Rosas is it not possible to use the one of the loan or grant programs offered through SONYMA similar to how investors use FHA then refi?
It's not that it's not possible. It's just that in this highly competitive market, sellers are taking offers with whoever has the most skin in the game. When you have a bunch of grants and have no money in a deal, you really have no attachment to the deal. Most sellers want to see people put money down at contract. At least 3% and sometimes more. We just had a multifamily that had 9 offers, in Soundview, and out of 9 2 were FHA, the rest were 20 to 50% DP on a 699k house. We picked a buyer and had them put 10% down at contract. 70k to tie the property up. Just an example of how this market is moving in the Bronx.
But for example, in Pa where we flip, one of our buyers has 1k down on a 134k purchase price. Different market. And they are using a USDA loan which is 100% financing in rural areas.
The answer is that it really depends the market and the Bronx is a true sellers' market right now making it more difficult to do so.
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