Hello everyone out there. My name is Johnny. I just want to introduce myself first, since I am going to be active here lately. I want to show my respect to everybody in BP, and thank beforehand any help I can get.
I am currently searching to buy my first multifamily property. It is time to pull the trigger for me and my wife. I live in Queens, New York. Unfortunately, prices in my area are crazy, so we narrowed it down to Jersey City, Union City or West New York. I am currently in talks with banks for mortgages. We both have full time jobs, our credit scores are very good, and we have some savings.
I have to be honest. I do not know if I would be able to find the right property, or get a good deal. I feel really like a rookie trying to play in the NBA. All that I know is that I made my mind already, and that I will not pay a rent for much longer. I would love to hear from investors in the places I mentioned before, maybe get some good and honest referrals to work with. I have the biggest respect for anybody that can help me to get a step closer to my goal, any suggestion or idea will be very welcome. I saw some multifamilies, for prices we can afford. My mortgage broker from Citibank told me that in his opinion, I should put a 5% down, and keep some cash to still pay the closing cost, and keep some cash on me in case I need to do some work at the house, or in case things go a little ugly after the purchase. I thought It was always better to put 20% down, even if I keep very little in my bank account after that, because I was trying to avoid the PMI. He might be right, and since we are first time buyers, it makes sense. No matter what, I am open to any thoughts about it.
I know that if I want to get a better deal I have to be willing to go into maybe not that desirable areas. The problem is that sometimes when I use the engine from realtor.com to verify crime areas, sometimes it is very red, and scary. I am sure I am not the only one worried about this.
I have some questions. What experience people here think about the down payment? Should I follow my mortgage broker advice, put only a 5% or 10% down,and hold some cash on me just in case, or should I try to put the 20% down, and save the PMI? , even if that means to barely have cash as a back up.
What is your opinion about to hire an independent mortgage broker ? Are they worth it ?
And the last one, what parts of Jersey city or Union city do you think are worth to invest now, or zip codes?
I want to apologize for any kind of grammar mistake in advance. English is not my first language.
Thank you very much all
HI @John Tappi. I try to help you along by answering some of your questions, but I am not from your neck of woods so I'll not advise on where to invest, Union City, etc.
(1) Follow your mortgage broker's advice and go with a low down payment on your first deal. Always leave yourself with some cash reserves.
(2) Get yourself an independent mortgage broker - preferable one who specializes in, or at least is familiar with, FHA loan. Better yet, try to get your mortgage through a small regional bank or credit union in the area you are trying to invest in. The big banks are a nightmare to deal with should any last-minutes issues come up prior to closing.
(3) If you are able to live in the small MF that you are going to acquire, consider "house-hackng" and getting an FHA owner occupier loan with 3.5% down.
(4) Finally, don't be overly concerned about analyzing crime statistics online. You'll only drive yourself crazy and scare yourself out of deal. Pick 2 or 3 areas that you think you might like to invest and live in, then drive those areas on the weekends and evenings. Get a feel for each area. If you don't get a warm fuzzy feeling while you're in the area stay away from it. Basically, as yourself a simple question: Would I like to live here? If the answer is "No", then find another area.
All the best with your first deal.
Welcome, John! Sounds like you're doing all the right things to position yourself for your first purchase.
I couldn't agree more with @David Cruice - I think it will be important for you to find a local bank / credit union to build a relationship. And the FHA owner / occupant loan (house hacking) is a great strategy. If I started my real estate investment career over I would do it early and often.
Finally, when you purchase your first property, strongly recommend having some cash reserves to protect yourself from problems that may arise. I just listened to a Bigger Pockets podcast where the guest talked about a multi-unit property he purchased and projected $50,000 in renovations over the first 6 years. He ended up having to complete all repairs in the first 6 months or so. A little cash cushion is a good bet for you right now.
Best of luck to you and I look forward to following your journey!
Thank you David and thank you Christina. I took notes on everything you wrote. I think contact a mortgage broker makes a lot of sense for us right now, and regular banks as well. I don't know exactly how they operate, if I have to pay them a fee or as someone told me, the banks pay them. I have someone located with outstanding reviews on Yelp here in New York. His name is Sean, and his company is Block Financial Resources. Someone here worked with him before?
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