Newbie from South Jersey (Philadelphia suburbs)

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Newbie from South Jersey (Philadelphia suburbs)

Tim Dastis
Cherry Hill, NJ · Member since 2013 · 19 posts · 0 votes

Hello all,

I'm on the verge of turning 30 next month and really want to begin investing in real estate.  I don't ever plan to make this a full-time gig as my career as an engineer is fun and rewarding, but I like the idea of owning multiple properties and the financial flexibility that comes along with that.

My wife and I purchased a new construction home in 2009 and took advantage of the $8k homebuyer credit.  6 years later we are selling our home at roughly a $15k loss, which is certainly unpleasant.  Due to the neighborhood never being finished by the developer, the area in general, and my 1 hour+ nightly commute, we were just ready to take the loss and move on.  

We are very interested in buying an owner-occupied duplex as a short term (2-3 years) plan. We would then purchase a SFH for ourselves and continue to own the duplex and rent both units. At least thats the plan for now.

If all goes well we will be closing in mid-November and moving in with my mother-in-law (yikes) while we find a place.  I think we rushed into the last place and we paid for that mistake.  My wife and I are on the same page and really want to take our time finding a deal that works in a location that improves my commute and can pull decent rent for the one unit while we live in the other and both once we move on.

We have about $15-20k liquid right now which I know isn't nearly enough.  There's about $15k in other investments that I would rather leave untouched (Roth, employee stock).  We should be able to squirrel away roughly $4k a month during our stay with family so we should be able to get enough cash together quickly.

I'm really looking in the area along the 295 corridor from anywhere north of Rt. 42 up to Mt. Laurel. Would also consider something down in the Mullica Hill/Swedesboro area (close to NJ turnpike exit 2). I've joined my local REIA and hope to make some connections through there, but would also like to hear from local investors and agents through here. I like my current realtor for selling my home but I don't know if he has the investment property experience I am looking for so if you have some experience as an agent please contact me through here.

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  • Grant Greene
    Lender · Tucson, AZ · Member since 2015 · 279 posts · 91 votes
    10y

    Tim:

    Since you're planning on living in the duplex (at least for a year, I would assume), an FHA loan could very well be your best bet. Since it's a two-unit property, the loan limit is substantially higher than the $271K that everyone thinks of when they hear "FHA loan". Also, the down payment could be as low as 3.5% - it's nigh impossible to find a loan for an investment property under 15% (it's usually 20 or 25%). Your plan to live there and then eventually move out to another SFH and rent out both units is a sound one. I would recommend you sit down with a mortgage professional and share this plan with her/him. Since you don't pay a mortgage pro for consulting, it's going to be in her/his best interest to give you sound advice so you'll see and reap the value she/he has to offer. I wish you the very best!

    Grant

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  • Tim Dastis
    OP
    Cherry Hill, NJ · Member since 2013 · 19 posts · 0 votes
    10y
    Originally posted by @Grant Greene:

    Tim:

    Since you're planning on living in the duplex (at least for a year, I would assume), an FHA loan could very well be your best bet. Since it's a two-unit property, the loan limit is substantially higher than the $271K that everyone thinks of when they hear "FHA loan". Also, the down payment could be as low as 3.5% - it's nigh impossible to find a loan for an investment property under 15% (it's usually 20 or 25%). Your plan to live there and then eventually move out to another SFH and rent out both units is a sound one. I would recommend you sit down with a mortgage professional and share this plan with her/him. Since you don't pay a mortgage pro for consulting, it's going to be in her/his best interest to give you sound advice so you'll see and reap the value she/he has to offer. I wish you the very best!

    Grant

     Thanks Grant,

    I feel like with the last home we simply didnt have enough down payment (roughly 10%) to absorb a hit that we took.  It really left us high and dry come selling time since we're pretty much breaking even on sale prices + fees - mortgage balance

    I'd like to avoid PMI especially since seeing now that they never go away on an FHA loan.

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  • Grant Greene
    Lender · Tucson, AZ · Member since 2015 · 279 posts · 91 votes
    10y

    Tim:

    You bring up an excellent point about MI, and it's a valid one. I don't work for the FHA, so I don't want to give you the impression that I'm advocating for them, but the MI issue may not be as big a deal as you think. That's the reason I would recommend sitting down with a mortgage pro (my company is not licensed in PA or NJ, so I'm not trying to get your business). She/he will be able to run payment scenarios for you - you might find that going FHA is a very viable option because the monthly payment WITH the MI isn't that much more AND you have the advantage of getting in with a MUCH lower down payment. The out-of-pocket cash you save could FAR outweigh the "negatives" you might feel about FHA. As I said in my previous message, meeting with a mortgage person won't cost you anything. The only way they get paid is when they present you with the option you find most attractive and works best for you. I hope that help!

    Grant

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  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    10y

    @Tim Dastis

    Welcome to Bigger Pockets. It is a good community to network and learn about all aspects of real-estate investing.

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