Newbie with some Questions in Rochester, NY

[Bruce McKenty]

Hello Everyone!

My name is Bruce and I am an aspiring investor from the Rochester area. I hope to, someday, be able to achieve financial freedom through real estate. I have a long way to go but I’m hoping to start my journey soon. I do have some questions for those experienced Rochester area investors out there that I was hoping to get some help with:

Because I don't have much cash on hand and I want to get started as soon as possible, I am interested in utilizing an FHA Loan and house hacking, preferably a four family in the range of $200,000 or less. My thought behind this is to not only cover the costs but to generate some positive cash flow. From cursory analysis of some properties I have seen on the MLS, this seems to me to be realistic. Is it?

So I have about $8,000 saved up which would be just enough to cover the 3.5% down payment on a $200,000 property but would be all but gone when it comes time to pay the closing costs. In your experience, how much do closing costs generally run on a $200,000 property? A $100,000? Is there any chance in the current Rochester multifamily market of getting a seller to cover the closing costs or do I just have to be patient and keep saving?

Thanks very much for reading and for any help that you can provide!

-Bruce 

[George Blower]

@Bruce McKenty

Welcome to Bigger Pockets.

[Bruce McKenty]

Thanks very much!

@George Blower

[Martin Grizzanti]

Closing costs are always more than the realtor will tell you. FHA on a 200k house you're looking at 17-20k all in to close. Might even be higher with expensive insurance or outside factors. Take your time, and make sure you know all of the numbers.

[Bruce McKenty]

@Martin Grizzanti thanks very much for taking the time to respond! I really appreciate it!

I definitely won't be diving into anything without seriously understanding the numbers. (Even if I am comfortable, I will probably come back here to ask when the time comes just to be sure I'm not missing anything glaring.)

So you're thinking that the chances of working out a deal to have the seller cover the closing costs is a long shot and that I should just be patient and keep saving until I have some more cash?

Do you think that my goal (a 4-unit for $200k that will generate positive cash flow off of only 3 of the 4 unit's rent) realistic?

Thanks again!

[Martin Grizzanti]

Typically, your first deal will never be a slam dunk. I think you should do FHA for the first deal. House hack it. Learn how to be a landlord, and make a few dollars while living for free. I would make sure you have a down payment and enough reserves in your savings where you are not super leveraged.

[Bruce McKenty]

Thanks very much for the advice, I really appreciate it!

@Martin Grizzanti