I have been practicing anylazing multifamily residential property in Austin TX, I would plan to use a 3.5% down payment, which I noticed brings "mortgage insurance " as another expense, does anybody have experience with this,? it seems that mortgage insurance can make a big difference if the deals will positively cash flow.
@Stephen Benson Mortgage Insurance is a thing with any down payment under 20% and has a cost. I think my place in East Austin is $145 you'd want to check with your loan officer to get exact numbers. My purchase price was $250,000.
It also never goes away with FHA whereas with conventional it can drop off
Hey Stephen, I've run into the same issue during my analysis, however I've also found out that some banks have 3% mortgages to compete with FHA loans. Many of these have additional insurance that goes away once you develop 20% equity in the property. Take a look and see if that helps you numbers!
Do you plan on living in this property (house hacking)? If not, 3.5% down is not going to be an option.
I think new investors must realize when calculating and running the numbers. Unless you got an absolute steal on the price you will not cash flow property with FHA or loans less than 20% down. You should always calculate the numbers as if you were putting 30% down. 30% is the benchmark the bank use and you should too.
This way you don't walk away from a good deal because you got 3.5% to work with. In the beginning, you got to work with the cards you are dealt with.
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