Hello BP Naton,
I am searching for my first house here in the Fort Bragg/Fayetteville area, with the plans to buy and hold. I have about 35k saved up and with the help of a family member My budget is up to 80k.
My question is should I be paying cash or taking a loan out for my first purchase? I'm a newbie to REI, so with that in mind I was wondering if anybody had a advice in which path I should take.
I am not exactly sure where my credit stands because my entire life I have always paid cash for everything. So I would imagine it would be little to none. Im sure my family would co-sign on a mortage if I decide to use a loan.
Right now I am leaning towards taking a 15 year loan, that way I can afford any repairs or hidden expenses that would come along. I should have pretty good cash flow on the home considering I will be getting paid a monthly BAH from the military, as well as having a roommate live with me.
Hey @Brett Campbell welcome to BP!
First off, great questions. These are the same debates that I struggled with last year when I decided to start investing as well.
The answers are pretty subjective, and really depend on what you are personally looking to do when it comes to investing. Therefore, I've included links below to a few episodes of the #AskBP podcast. They are only a few minutes a piece, and definitely worth the time.
1) Paying Cash or Taking a Loan (i.e. Leveraging) - Podcast #27
2) 15 vs 30 year mortgage - Podcast #30
3) Investing while in the military - Podcast #36
Hopefully this help! Best of luck and feel free to send me a message if there is anything I can do to help.
Is your goal to buy and hold or to sell this home when you move or hold onto it and rent it from wherever you get sent next? I had a friend that lived at pope and got orders(to move) and tried to rent it out.. in the meantime his mortgage still needed to be paid and it took him 4 months to find someone, he refused to us a PM. For that reason I'd suggest not putting all of your eggs in one basket, put down a decent down payment, but keep enough money for emergencies/PCS's. It was financially difficult for him, I don't want to see the same thing happen to you.
@Brett Campbell Thank you for your service.
The best benefit available to you is a VA backed loan.
In Cumberland county, the max VA benefit is:
1 unit - $417,000
2 unit - $533,850
3 unit - $645,300
4 unit - $801,950
What you want to do is get your COE that way you will your eligibility and your funding fee.
More important that getting a loan is to plan for what you would want to do with the property when you get orders to move.
PM me and I will be happy to help you think through the options you would have.
Nice to meet a fellow military investor!!
Those are great debates. It really depends on your goals and plans. We are empire builders who have limited cash flow. Therefore we do 30 year loans and put as little down as possible. This allows us to be able to requalifies easier than having the higher payment of a 15 year loan and the burden to requalify. We also put as little down cash wise, because it allows us to have th money for the next house quicker and easier.
I believe if you can find an owner-finance deal, that would be an ideal way to enter into a real estate investment if you can get the price and terms you need to earn the % return you desire.
My first few deals in residential real estate were financed by the owner. The down payments were 5% to 10%. No mortgage insurance was required which was a nice benefit and the loan didn't go on my credit report.
Later when interest rates dropped to 4% I refinanced them with traditional bank loans.