Next steps for my second investment property

[Brittany Voccio]

Hi everyone!

I'm a new investor trying to figure out my next steps and could use some advise. I purchase my first property about two years ago. It's a 4 family and i'm living in one unit. I want to invest in my second property but i'm stuck on how I should go about financing it. I purchased my current property with an FHA loan putting 3.5% down and I have a 2.75% interest rate so it seems to be in my best interest (literally) not to refinance since interest rates are now significantly higher. However, in order to use another FHA loan with 3.5% down I would have to refinance since you can only have one FHA at a time. I have spoken to one loan officer so far who said that with a conventional loan I would have to put 20% down on the next property if it was a multi family, even if it's owner occupied but if I purchased a single family as a primary residence with a conventional loan I could put 5% down. Another factor would be that if I moved out of my current unit in the 4 family I would cash flow roughly $800 a month. I had my mind set on a another multi-family because house hacking a single family would be tough since I have two large dogs but I don't have the cash for 20% down. I know there are a lot of options out there so any advice would be greatly appreciated. Thank you in advance!

[Benjamin Aaker]

You could purchase the next multifamily with 20% down using money from a home equity line of credit on your current primary residence. The HELOC will likely have a variable rate a percentage point or two above what you would get on a conventional loan, but you will be borrowing a smaller amount.