New to investing and wondering about financing options

[Cameron Rafford]

Hey everybody!

Brand new to the forum and also a brand new investor. Just bought my first buy and hold property in Dover, NH last September 2020 and really had no intention of continuing to invest beyond that. My girlfriend and I were looking to purchase  our first home and buying a duplex seemed like a great way to offset our mortgage payment. As soon as we got settled in and got that first rent payment from our tenants, I really started to see the bigger picture with this buy and hold strategy. It took a little convincing but my girlfriend came around and she agreed this would be a good move for us going forward.Creating this cash flow every month would really push us in the direction of attaining the goal of financial freedom. 

Fast forward to now and I've pretty much been splitting up all my time outside of work between fixing up our duplex and learning as much as I possibly can about REI. I know I still have a lot to learn but it also feels like that next property can't come soon enough.

We financed our current duplex with an FHA loan. As far as that next property goes, we don't really have enough capital at this point for a conventional loan with a 20% down payment and I'm wondering what our other options are as far as financing. I know there is hard money/private lending, but not sure it's the best move for us as new investors with little experience. We're also open to moving into what would be the next property as well as soon as the 1 year of residency is up for the FHA loan. Any tips for my next steps would be greatly appreciated!

Thanks!

Cam

[Zander Kempf]

@Cameron Rafford the FHA loan requires that, at the time of closing, you "intend" to live in the house for a year. No one is checking a timer on the exact number of days that you're living there. There is no prepay penalty so you could do a refi whenever you wanted. On the other hand, a rental property type loan will have a higher interest rate, so depending on how much cash you can pull out and how long you intent to hold the property, it may make more sense to keep the loan.