Suggestions on financing/loans

7 Replies | Cleveland, Ohio

Hey Bigger Pockets, 

I am in a real pickle. I really want to get invested in real estate here in Cleveland and feel the best way to learn is to jump in an do it. I received approval for an FHA loan that would allow me to only put 3.5% down. Issue is, I want at least a 4 unit because the loan requires I live in one for a year. 4 Units would allow me to still cash flow while living there. At 3-4 units, my loan requires I put 25% down which I can't afford without raising capital. 1-2 units doesn't appeal because of all the expenses (high property tax, PMI, etc). Any suggestions on how to raise the capital to afford the down payment (and potential repairs) or different loan options that would allow me to put a low down payment on more than a 2 unit property?

Thanks for your time!

Raising capital is all relational. If you have good solid relationships, in your situation, bringing someone on to JV that has the capital and you manage it. Get creative and think along those lines. Giving up some of the equity is not always a bad thing to get what you really want to achieve. If you can do it right, you can do it over and over again.

I’d say you need experience first before you start pursuing outside money.  Go with a 2-unit that needs work, try to do the work yourself for experience.  Trust me the first year will fly by.  

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Originally posted by @Dax Nollenberger:

Hey Bigger Pockets, 

I am in a real pickle. I really want to get invested in real estate here in Cleveland and feel the best way to learn is to jump in an do it. I received approval for an FHA loan that would allow me to only put 3.5% down. Issue is, I want at least a 4 unit because the loan requires I live in one for a year. 4 Units would allow me to still cash flow while living there. At 3-4 units, my loan requires I put 25% down which I can't afford without raising capital. 1-2 units doesn't appeal because of all the expenses (high property tax, PMI, etc). Any suggestions on how to raise the capital to afford the down payment (and potential repairs) or different loan options that would allow me to put a low down payment on more than a 2 unit property?

Thanks for your time!

 No special tricks to raising the capital here. Save your income. Get a 2nd or 3rd job, drive Uber etc....

Thank you all for the response. I'm just anxious to jump in and really learn as I go but realize that there are steps that I must take first. I'm using every avenue available to build the capital. I've minimized my expenses to the bare bones and am doing as many sides hustles as my time allows. Now all I need is some patience. 

Dax- We hold a monthly meet-up that is open to all interested in Real Estate.  We are at the Melt Bar & Grilled in Independence.  Our next meet-up is Thursday August 29th at 6:00pm.

Please feel free to stop by and ask questions!

Regards,

Ron

For an FHA loan they are requiring you to put 25% down? That seems odd. Please double check with the person you are talking with. You should be able to put as little as 3.5% down...now yes you will have to pay PMI, but putting 25% down on an FHA loan for a 4 plex does not seem accurate.

Hey Dax, I'm pretty sure you can use a 3.5% FHA loan on a property 1-4 units. Of course this has to be your primary residence, so you'll need to live in one of them for awhile. Whereever you heard that you could only use that loan product for 1-2 units may be bad information. Check with other lenders. Buying a 4 plex with only 3.5 % down is probably your best way to start!

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