Househack Advice for first time buyer and investor

Detroit, Michigan
House Hacking
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Househack Advice for first time buyer and investor

Alexandra Belle
Member since 2022 路 15 posts 路 6 votes

Hi BP I'm a first time homebuyer & investor starting my real estate journey. I want to house-hack as my first deal. Duplex or triplex. What advice can you give me? I heard to steer away from big banks and get a 30 year conv from a local bank. A lot of the multi-family's in my area are in need of renovations. What type of loan would allow me to buy the property and renovate it? Is a conv loan the best route to take? Should I seek out a private money lender from my Facebook investor group? If private money, what's a fair jv agreement to present? I want to keep this property long term.

What are some things to red flag from a lender? What are some things that would make a lender favorable? What's a fair rate and what's a red-flag rate from a conventional lender?

I know to shop around but I don't really know what's up or down in this industry yet so I'm all ears to any advice or stories you have for me!

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Matthew McKee
Real Estate Coach 路 Boise, ID 路 Member since 2022 路 177 posts 路 285 votes
3y
Quote from @Paul De Luca:

@Alexandra Belle

Work with agents and lenders that work with investors and/or have invested in real estate themselves. I recommend getting an FHA loan or low-money down (5-10%) conventional portfolio product if you want to house hack.

If you're looking for a renovation loan, you could use an FHA 203k or use hard money. A fair rate for you is going to depend on a number of variables so the only way to find out is to talk to multiple lenders and then compare each loan product apples to apples.

 @Alexandra Belle

This is key 馃攽 talking to both lenders and agents who are investors themselves will get you further than anything. I鈥檇 recommend looking for a mortgage broker if able, brokers typically can give you access to more products at lower costs than retail lenders.

2Reply
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  • Paul De Luca
    Real Estate Agent 路 Chicago, IL 路 Member since 2018 路 1k+ posts 路 1k+ votes
    3y

    @Alexandra Belle

    Work with agents and lenders that work with investors and/or have invested in real estate themselves. I recommend getting an FHA loan or low-money down (5-10%) conventional portfolio product if you want to house hack.

    If you're looking for a renovation loan, you could use an FHA 203k or use hard money. A fair rate for you is going to depend on a number of variables so the only way to find out is to talk to multiple lenders and then compare each loan product apples to apples.

    1Reply
  • Alexandra Belle
    OP
    Member since 2022 路 15 posts 路 6 votes
    3y

    Thanks for this! I did consider a 203k loan however I keep hearing it takes FOREVER to actually go through the process and get your property to even start working on it. I guess I鈥檒l never know for sure unless I actually try myself huh 

    1Reply
  • Paul De Luca
    Real Estate Agent 路 Chicago, IL 路 Member since 2018 路 1k+ posts 路 1k+ votes
    3y

    @Alexandra Belle

    From what I understand they can be difficult to actually close on but with a slowdown in the market a seller might now be more receptive to that sort of offer.

    0Reply
  • Rick Albert
    Real Estate Agent 路 Los Angeles, CA 路 Member since 2018 路 2k+ posts 路 1k+ votes
    3y

    You are asking a lot of great questions. As mentioned, the FHA 203(k) loan is a great start for renovations (that's what I did).

    I would start with speaking with a few lenders and decide on an investor friendly real estate agent in your area. That way they can help you in setting expectations (such as what you actually qualify for and what's available) and go from there. 

    It would be difficult for anyone here to give you a clear plan because we don't have enough information. However on the surface you seem to be on the right track with going with multifamily options.

    0Reply
  • Joe Chapman
    Real Estate Agent 路 Novi, MI 路 Member since 2021 路 12 posts 路 5 votes
    3y

    I am an agent. I live in Farmington Hills with an office in Brighton. What area are you looking to buy Detroit or the suburbs? I would be happy to chat sometime.

    0Reply
  • Alexandra Belle
    OP
    Member since 2022 路 15 posts 路 6 votes
    3y
    Quote from @Rick Albert:

    You are asking a lot of great questions. As mentioned, the FHA 203(k) loan is a great start for renovations (that's what I did).

    I would start with speaking with a few lenders and decide on an investor friendly real estate agent in your area. That way they can help you in setting expectations (such as what you actually qualify for and what's available) and go from there. 

    It would be difficult for anyone here to give you a clear plan because we don't have enough information. However on the surface you seem to be on the right track with going with multifamily options.

    Hey Rick thanks for this reassurance! In your experience with the 203k loan, how long did it take from the time you put the offer in to actually closing? If you could go back and redo it, is there anything you would have done differently? 

    0Reply
  • Drew SygitBusiness Member
    Property Manager 路 Royal Oak, MI 路 Member since 2012 路 12k+ posts 路 9k+ votes
    3y

    @Alexandra Belle if you're going to live in a unit, buy a 2-4 unit with a mortgage that allows you to roll the repairs into the purchase mortgage.

    https://singlefamily.fanniemae...

    or 

    https://www.hud.gov/program_of...

    [email protected]248-209-6824
    Logical Property Management4.9451 Reviews
    WebsiteView Page
    0Reply
  • Eliott Elias
    Investor 路 Austin, TX 路 Member since 2021 路 9k+ posts 路 5k+ votes
    3y

    What does your timeline look like? Go with hard money 

    0Reply
  • Matthew McKee
    Real Estate Coach 路 Boise, ID 路 Member since 2022 路 177 posts 路 285 votes
    3y
    Quote from @Paul De Luca:

    @Alexandra Belle

    Work with agents and lenders that work with investors and/or have invested in real estate themselves. I recommend getting an FHA loan or low-money down (5-10%) conventional portfolio product if you want to house hack.

    If you're looking for a renovation loan, you could use an FHA 203k or use hard money. A fair rate for you is going to depend on a number of variables so the only way to find out is to talk to multiple lenders and then compare each loan product apples to apples.

     @Alexandra Belle

    This is key 馃攽 talking to both lenders and agents who are investors themselves will get you further than anything. I鈥檇 recommend looking for a mortgage broker if able, brokers typically can give you access to more products at lower costs than retail lenders.

    2Reply
  • Lumi Ispas
    Real Estate Consultant 路 Chicago, IL 路 Member since 2014 路 720 posts 路 439 votes
    3y

    @Alexandra Belle, you are a smart lady to looking to buy and live for free. 

    You have at least a number of options depending where you want to buy, how much are rents in your area, and for how much you are approved for.

    1. You can use FHA loans with 3.5% down if property is in good condition

    2. FHA 203K if the property needs a lot of work

    3. A conventional loan with renovation, however for a 3-4 unit the down payment will be 20-25%.

    You want to find a great team to help you strategies: an investor Realtor and a lender that knows a lot of programs. I will say look for Realtors and Lenders that are investors themselves and have been in the business fulltime from before the market crash of 2008. 

    Good luck to you!

    0Reply
  • Alexandra Belle
    OP
    Member since 2022 路 15 posts 路 6 votes
    3y
    Quote from @Eliott Elias:

    What does your timeline look like? Go with hard money 


     So I want to obtain the property and have it rehabbed and ready within 3/4 months. I considered hard money but some people said it's a bad idea because interest is usually so much higher than other avenues. 

    If I do go hard money, what would be an ideal situation? Refinance? Is that the only option or are there more? 

    0Reply
  • Rick Albert
    Real Estate Agent 路 Los Angeles, CA 路 Member since 2018 路 2k+ posts 路 1k+ votes
    3y
    Quote from @Alexandra Belle:
    Quote from @Rick Albert:

    You are asking a lot of great questions. As mentioned, the FHA 203(k) loan is a great start for renovations (that's what I did).

    I would start with speaking with a few lenders and decide on an investor friendly real estate agent in your area. That way they can help you in setting expectations (such as what you actually qualify for and what's available) and go from there. 

    It would be difficult for anyone here to give you a clear plan because we don't have enough information. However on the surface you seem to be on the right track with going with multifamily options.

    Hey Rick thanks for this reassurance! In your experience with the 203k loan, how long did it take from the time you put the offer in to actually closing? If you could go back and redo it, is there anything you would have done differently? 


    By the time we got our offer accepted to closing was about 45 days. Typically the biggest delay is the contractor's bid. Going back, we had major issues with our lender issuing the checks late. I would have stayed on it more often with the lender. Our project was also big (addition, remodel, and converting the garage into an ADU). I would have paid for the HUD Consultant to come by more often to keep the checks flowing, even if it was a smaller amount.

    1Reply
  • Eliott Elias
    Investor 路 Austin, TX 路 Member since 2021 路 9k+ posts 路 5k+ votes
    3y

    Don't forget the tenant aspect. Be a landlord and not a friend, collect rents and don't give any leeway 

    0Reply
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