I’m trying to buy a rental property around this time next year. I would be 21 and will have 40k to invest in a property in New Jersey. I’m try to find the best way thank you.
@Jovensky Fenelon with $40k to work with FHA loans are probably going to be your best bet. I'm using an FHA 203k loan for my first property, which rolls rehab costs into the mortgage with 3.5% down. This means that theoretically $40,000 will get you into a $500k property with $17,500 down and leave you with $22,500 for closing costs and reserves. The catch is you have to live in the property for a year. So you could either get a 2-4 unit multi family and live in one of the units or rent out a single family by the room.
@Jovensky Fenelon with $40k to work with FHA loans are probably going to be your best bet. I'm using an FHA 203k loan for my first property, which rolls rehab costs into the mortgage with 3.5% down. This means that theoretically $40,000 will get you into a $500k property with $17,500 down and leave you with $22,500 for closing costs and reserves. The catch is you have to live in the property for a year. So you could either get a 2-4 unit multi family and live in one of the units or rent out a single family by the room.
House hacking would be your best bet or a fha 203k rehab loan. Both of these should leave you with reserves as well! If you have any questions about certain areas, don’t hesitate to ask!
If you are 21 can I assume you will be house hacking? Where in NJ are you looking? Are you willing to saying how income you might be having? You may qualify for a USDA loan which is 0% down. Message me if you want more particulars and I can help you out.
@Brandon C. The rehab cost is rolled into the mortgage for a 203k loan. For example if you get a property for $350k and $50k of rehab is needed then $14k would be your down payment (3.5% of $400k) and the loan amount would be $386k. My loan guy said closing costs will probably be in the ballpark of $12k and then you would want to have at least $10k in reserves. This comes out to needing $36k on hand at the minimum before buying this type of property.