Hey everyone! My motivation to start out buying and renting out properties is growing day by day but I am looking for any guidance and advice on how to move forward with a few properties that I predict with not only grow in value in the near future to sell but to provide consistent cash flow month to month. My main concern in "affording" the properties and I can only put about 3-5% down on the property. Is that ideal or should I put myself in a better spot financially before making any moves?
If you can put 3-5% down on a multifamily you may be able to move forward with an FHA loan, if you are not willing to live in the property or if the property is out of state you will probably have to save up much more. Most likely around 20% o the purchase price.
Correct, for your first deal if you owner occupy, you can go 3.5% FHA or 5% mass housing.
After likely you will go with conventional financing, or move to working with a HML, partner- or creative financing
@Nick Santamaria There are actually a number of factors.. FHA is one of the easier to qualify for with the 3.5% down, but as Aaron Klatt mentioned you would need to live in the property. Still I would strongly suggest meeting with a mortgage broker who understands RE Investing in your area.. they will help you get a better picture of all your options.. Good luck and Welcome to Bigger Pockets.
It will be very difficult to be cash flow positive at the end of the month if you’re owner occupying one unit and only putting 5% down. Maybe your expenses will get covered by the other rents, but unlikely you’ll have excess cash.
If you can owner occupy a duplex/triplex, 3.5% down will be enough. And then figure in another 10k in closing costs.
You don't always have to go the "multi-family" route for a smart first investment either. If you have the investor vision, and are willing to work hard, you can find yourself a home that needs some work, is in a nice area, and will appreciate well. You can then use the equity as a tool down the road. That's what I did. Although it is tough to find a home that will pass FHA requirements that needs work, it is possible.
I'm in the "looking for my first" boat as well. It looks like 25% down on multi family and 15-20% for single family for the down payment with convention financing.