Hi everyone! so I am brand new as a real estate agent that I am doing part time and wanting to invest. I have been searching for a small property to start with in South Carolina by Myrtle beach just because I have a friend who lives in SC but I'd be open to invest anywhere. I don't have much money to put down, I wanted to start with a multi family so I'm looking to get some insight. Should I wait and save more money? Should I apply for FHA? I would just like to get this started so I could build up my portfolio and eventually have enough doors for me to quit my full time day job. Any advice is much appreciated! I love listening to you guys podcast. Thank you.
People that don't have much money generally don't start with multifamily due to the downpayment requirements on a commercial loan.
I would think SFR or wholesaling would be better places to start.
If you are set on MF then start asking sellers if they will carry back a 2nd mortgage for the downpayment so that you don't need much money to get started. This would be more likely than finding someone to do 100% owner financing.
@Kristie Gautier Welcome. With an FHA loan you can buy up to a 4 unit building. Has to be owner occupied for a year though and it sounds like you don't live in SC. You may try to buy something as a secondary residence instead. You also have to meet income requirements so speak to a bank to get prequalified and see how much they will lend you. With little money and buying a multi if something goes wrong you may find yourself in trouble financially. I guess it depends on how much money you actually have.
@john underwood and @chris Rosenberg thank you so much for that insight!
Hey Cristie, an FHA loan is a great way to get some skin into the game and start building your real estate portfolio. There are many pros that come with utilizing this type of loan including a low down payment of 3.5% and easier credit score qualifications (A minimum of 580). However, it is an owner-occupied loan meaning you must live in the unit for a minimum of 1 year and pay a MIP (Mortgage Insurance Premium) that comes with the FHA loan.
Depending on the strategy you are using for multifamily and if the numbers make sense, you can essentially live for free and potentially gain some equity along the way to use for another property and then repeat the process.
@Kristie Gautier - buying out of state makes it a lot more difficult as well. Make sure you have someone there who you trust will guide you in the right direction. As @Chris Rosenberg mentioned - if things go wrong on a MF and you have no reserves you could find yourself in trouble. Id suggest investing that small amount you have and try to start wholesaling or growing your agent business or using an FHA for your primary residence, fix it up when you live in it and then move into the next one.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you