Financing options Multifamily home
Hello Everyone!
9 Months ago I purchased my first multifamily rental property utilizing the FHA 3.5% first time home buyer mortgage. Things have gone well, and I would like to purchase another multifamily property.
I do not believe I can use the FHA mortgage again unless I am relocating to another city.
Are there any low down payment alternatives to a conventional 20% down loan, preferably something 10% or lower / comparable to the FHA program that I could utilize to purchase another multifamily ?
Thank you!
We have a few owner finance, or lease option multifamily properties available. Just expect a higher interest rate for lower down payment options. You can offer 10% down to the current sellers and see if they are takers.
Then if they want the rest of the cash they can always sell your note to a note buyer.
Thank you @Bonnie Laslo, out of curiosity what are you offering?
Bonnie Laslo
@Denzer Campbell if you would like 10% down opportunities we have a couple of those, but you can also create them yourself by just making offers to anyone who is selling with the terms you want.
Been doing this a very long time, so just depends on your comfort level and what city you want to invest in.
Most common solution that reconciles with the BRRRRRrrrrr strategy is to refinance the current multi-fam out of FHA by demonstrating that you've gained sufficient equity to go conventional through whatever combination of improvements/appreciation/cash that is applicable to you.
And then go buy the next one using FHA.
If you're buying turnkey and waiting on equity via appreciation rather than forcing it, doesn't really work and you have to wait for appreciation or come in with cash during the refi.
Denzer that is great I am also a first time home owner and did not know that FHA offers a 3.5 % interest conventional loan. I was first going to establish my personal FICO since mine is in the gutter.
The other day I was contacted by way of text that FHA loans are available to first time owners; I just have not taken action. I did not know that banks are promoting their services. I often choose not to go to a bank knowing that I do not have much in the negotiation precess because of the FICO score not meeting the requisites of the bank. I do not like paying a high interest that would be the result of a FICO score below 600.
While I do not consider conventional loan acquisition as part of my first-line strategy it has worked for you and that is what it is all about finding a niche that works.
I will be attending a seminar in August 2016 to learn abut tax lien certificates and tax deeds since money is tight I would consider this strategy since I can find individuals to help in delaying the foreclosure process and get my investment back after two-years and with 18% interest income for Florida with the option to close if the owner does not pay his/her taxes. I can receive the single family home at below wholesale and sell it for less than the FMV or rent it out (if I want to play landlord). Again congratulations on your first multifamily apartment.
It is about time and money leveraging where you get the property free and clear for a small investment of $1,000 (in some cases as low as $180); the FMV of let us say $100,000 on the free and clear single home now can be leveraged by offsetting the cost below FMV (you decide 50% for a young couple starting out) and by selling below FMV since there is NO mortgage or liens on the property it is win/win...I like that!
Best part Denzer is that you can "repeat and rinse" and use more than one property by leveraging in other states to do your next deal -- but now with money in hand; to do a multifamily since the $50,000 in your pocket serves as an alternative -- a leveraged investment based on a small investment of $1000 with interest paid back along with your investment by the county (regulated by real estate law) compared to paying 3% interest on FHA conventional loan for 30-years on $100,000. I have always considered loans from banks as the last resort because of the FICO score. I am now looking at changing the FICO score just for peace of mind.