Alright so, I bought my first property with an FHA about a month and a half ago, and I am ready to head on to the next one. I am house hacking, and occupying the property, and already producing cash flow. The thing is, how do I buy my next property for the least amount of money down possible if I already used an FHA ... I have deals in the area I am in that I wanna jump on, a lot of which being foreclosures, or about to be foreclosed on homes, but I don't have a ton saved at the moment, thought that amount is growing every week. Do i just keep saving until I have 20% down for a conventional or is there another way around it? What have you done? What would you do if you were me? Thanks for your feedback if you have any!!
There are several ways to finance deals using creative financing strategies - seller financing or a combination of seller financing and more conventional terms (the old concept of OPM: Other People's Money)
- Locate deals where the sellers are willing to do Lease Options or Subject To: for example, tired landlords, people who need to relocate quickly and don't have much equity in their home at this point to sell and pay commissions. Of course the properties must still cash flow, cover expenses and produce a little bit of cash flow. Eventually you can refinance and cash them out (3-5 years). The good thing about this strategy is that when you refinance you don't have to come up with downpayment and closing costs can be financed into the loan.
- Open business lines of credit to finance quick purchases (that you can refinance) or downpayment: make sure that they are legit companies and don't charge upfront for application fees or transaction fees.
- Locate private lenders, like individuals looking to partner on deals to get higher ROIs, or institutional private lenders: these are companies or individuals using their IRAs to fund real estate deals.
These are just some suggestions. When I started buying properties for rentals (back in 1991) I used and leveraged a combination of these strategies to build a portfolio of 16 multi-family rentals in about 18 months. To this day, I still buy rentals that I can use creative financing, not conventional financing upfront.
@Hannah Woodward I am in the same exact boat as you!! I closed on my 4-unit using FHA this past August and I am now trying to move on to the next one...
After reviewing my options I think raising capital is the right move especially for a foreclosure I am looking at where I can increase the value greatly and then cash-out refinance to pay them back.
I will keep my eyes on here to see what others come up with!
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