Planning my first deal with a partner, but needing guidance
Hello Fellow Investors!
I am quite new to the REI game, but am very excited and motivated to get my first deal going. I am in a bit of a tricky situation and don't have the experience right now to confidently pick a path to follow with regards to my situation and my first deal.
Option 1) I am looking to buy a property with a partner at the moment, however we live in Southern California where properties tend to be quite expensive. My partner and I are in the process of saving for a down payment. We spoke to my lender and he suggested that we look into getting a multi family property via FHA loan and live in one of the units. This however, would limit potential cash flow as well as limit the options we would have because we need to BOTH be able to live on the property and still rent out the other units. Not to mention that the small down payment for the FHA plus PMI etc would be a cash flow killer right off the bat.
Option 2) The other option we are considering is investing out of state (i.e. Texas) due to the bang for your buck I have observed in properties out there. However, that would take away the option for an FHA loan since we cannot live in the property. This would be ok though because prices there are so reasonable we could get a conventional loan more than likely (Ive heard if you can even get 5% of a down payment you should consider a conventional loan). The down side to this of course would be that we would need to find a good PM company, and the distance would make it difficult/ risky to manage.
Option 3) Finally, it has crossed our minds that perhaps it would not be a bad idea to do flip for our first deal on a home that needs basic and minor cosmetic updates (new coat of paint, laminate floors to replace carpet, updated appliances and cabinets perhaps). My partner has connections with trusted contractors who would not mislead us and save us money. This way we could buy a SFH in the area for half the price of a MFH, perhaps look into getting a 203k loan (to cover rehab) or a conventional loan/ARM and then use the profit to put toward a bigger down payment for a rental property in the area that will cash flow.
I am itching to hear from some successful investors out there regarding which of these options would benefit us most given the situation? Is there an option we are not considering?
Apologies for the novel but as you all know every detail counts. I guess having options is not a bad problem to have, but never the less it is a problem when ironing out goals/plans for a good investment.
PS My credit score is fair at the moment and am W2. My partners is low 700, but he is 1099.
Thank you all in advance!