Down payment assistance? are the restrictions WORTH it?

Down payment assistance? are the restrictions WORTH it?

Realtor · Jacksonville, FL · Member since 2013 · 227 posts · 35 votes

So, I started this down payment assistance program course thing. I'm eligible and it allows me to buy a duplex and lets me rent the other side out while I live in one of the units. Of course, it requires that I occupy the property. I MUST live in the property for a minimum of 3 years tho. I thought "heyy, why not? they'll give me up to 7,500k towards my downpayment, and I have to put in at least 3k." 

I think this is great, however, my INITIAL PLAN was to house hack it for ONE year (which is what my FHA loan requires a minimum occupancy length of) and after that year is up, I was going to try to start looking for the next investment.

So if I stick with my initial plan which was to move on to the next after that first year, of course I'll have the unit I live in on this first one rented out and that'll of course maximize my cash flow for this investment. IF HOWEVER I follow through with the down payment assistance, I would have to stay there an EXTRA TWO years before house hacking my next property. So I just wanted to see what you guys in the community thought about this. I know it depends on what I PERSONALLY want to do and how fast I want to do it and all that but I want to hear your opinions...What would you do? what are some other things to consider?

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Rental Property Investor · Ypsilanti, MI · Member since 2015 · 70 posts · 39 votes
9y
If you can make more than $312.50/month after all expenses you should not take the $7,500 because you would make more renting it out after a year. But if you determine that you will only make $150/ month after all expenses you should take the $7,500 because you would make more. 400.00 x 24 = $9,600 312.50 x 24 = $7,500 150.00 x 24 = $3,600
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  • Rental Property Investor · Ypsilanti, MI · Member since 2015 · 70 posts · 39 votes
    9y
    If you take the assistance and stay 3 years you essentially get about $208/month in profit for the unit you will live in. $7500/36 months. If you don't take it and move after 1 year how much profit will you have after all expenses are paid? To make it equal I think you would actually divide the $7,500 over 24 months since in either case you will occupy it for a minimum of one year. So if you can make more than $312.50 in profit per month after all expenses you should not take it.
  • Realtor · Jacksonville, FL · Member since 2013 · 227 posts · 35 votes
    9y
    Originally posted by @Lawrence Henkel III:

    If you take the assistance and stay 3 years you essentially get about $208/month in profit for the unit you will live in. $7500/36 months. If you don't take it and move after 1 year how much profit will you have after all expenses are paid? To make it equal I think you would actually divide the $7,500 over 24 months since in either case you will occupy it for a minimum of one year. So if you can make more than $312.50 in profit per month after all expenses you should not take it.

     You mean if I CAN'T make more than $312.50 in profit per month after all expenses, I should not take it?

  • Rental Property Investor · Ypsilanti, MI · Member since 2015 · 70 posts · 39 votes
    9y
    If you can make more than $312.50/month after all expenses you should not take the $7,500 because you would make more renting it out after a year. But if you determine that you will only make $150/ month after all expenses you should take the $7,500 because you would make more. 400.00 x 24 = $9,600 312.50 x 24 = $7,500 150.00 x 24 = $3,600
  • Fayetteville, NC · Member since 2016 · 50 posts · 29 votes
    9y
    Don't forget to account for the possible equity lost by staying in the same place. That alone could be your 7,000$.
  • Realtor · Jacksonville, FL · Member since 2013 · 227 posts · 35 votes
    9y
    Lawrence Henkel III So, the $7,500 down payment assistance would result in an extra $208 to my monthly net cash flow? In my case I've calculated a monthly net cash flow of $110. So add the $208 to $110?
  • Rental Property Investor · Ypsilanti, MI · Member since 2015 · 70 posts · 39 votes
    9y
    Jonathan Perez if you take the down payment assistance: They give you $7,500 and you need to stay for 3 years essentially you earned $7,500 you didn't have before. If you don't take it and you can move after 1 year and your cash flow is $110/ month for the 2 years you can rent it. You will only make $2,640. You would be better off taking the $7,500 and staying 3 years. You will make $4,860 more over the same period of time if you take the assistance.
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