Investment property loan

[Dexter Knox]

I’m a homeowner in California, just starting to think about an investment property in Orlando, or other market in Florida or Texas. 

My question is with an investment property loan I've heard the banks typically want 30% down, is this rumor true? Is there a way to do this with little down, like with an FHA loan? My current loan is conventional, my house prior was FHA but i sold it.

Another question: I’m considering a rental property that’s in the $200k to $250k range. However I’ve noticed some properties that are $70k only. These are tiny, and likely need work. But would something cheap like this be a wise first investment move, to get my feet wet? Or is it a waste of time and energy for little return? 

Thx

[Jonathan Robichaud]

Hi Dexter Knox

My understanding is that you can get a loan for an investment property with 20% down, but you will likely have to show some reserve for 6 months of mortgage payment including taxes and insurance.

As for understanding if it is worth it or not, you have to look at the numbers. Two $70k plus repairs properties might have a better return than a single $200k property.

As for time and energy management, your first property will be your most difficult because there is a lot to learn. I would recommend you read the “Long-distance real estate investing” book by David Greene. I think this will give you most of the answers you are looking for.

Jonathan R