Guidance Needed - Want to Purchase 1st House Hack Mid Next Year!

[Jared B.]

Hello everyone!

As a recent college graduate, my goal is to purchase my first rental property, a duplex, before I get married. I am looking to house hack with an FHA loan 3.5% down and am looking to buy mid next year.

I need advice on educating myself thoroughly (I have a few books, found BP podcast, YouTube videos, etc.), what methods/how to analyze properties for the numbers/profitability, what people to connect with (realtor, contractor, etc.), getting set with finances, even though I’d get married late next year, the timelines for everything, and the whole process overall. 

I am very much in the process of saving (with goal of $18k-$20k), and will buy in the southeastern Wisconsin area. 

I will probably house hack 2-3 times before living in our own home, and keep purchasing multi-families every year to build toward financial freedom.

I’d appreciate any advice and guidance, as this is how I want to start my real estate investing journey!! Thanks! 

[Michael Smythe]

In a perfect scenario you'd buy using FHA for the 3.5% down.

Also, look at the FHA 203(k) which allows rehab funds to be included in the mortgage:)

After you've renovated the property and added value, you'd want to refinance out of the FHA into a standard FNMA loan, so you can re-use the FHA loan for the next property.

The challenge is both FHA & FNMA require you to live in the property for the first 12 months of the LOAN before renting out the property. So, this will extend the amount of time you need to live in the property.
FYI - DSCR loans can be used on the refinance to pay off the FHA loan, but they have higher interest rates, fees and prepayment penalties.