Help with buying first owner-occupied property!

[Jonathan Bailey]

Hello!

I'm coming up on a year of my first year working after college. I make close to 60k and am also living at home. When I move out (hopefully by this time next year), I'd like to purchase an owner-occupied duplex/triplex and take advantage of an FHA loan. I've been doing my reading on landlording, rentals, etc. Since I'm living at home, I'm saving a ton of money and after paying down my student loans, I hope to have about 25k in savings to use towards a down payment/repair cash reserves by year's end.

Most duplex's & triplex's where I'd like to live go for about $250,000+ ... I worry I wouldn't qualify for an FHA loan that high. I read that it's possible to count current rent from a property towards your potential income? Does that mean potential rent from a property if it's been consistently rented out? 

Are there other options other than FHA loan that would make more sense for someone starting out? I live in Virginia if that helps.

[Clay Manship]

@Jonathan Bailey 

I was in my full-time job for six weeks when I closed on my first investment property. It is a 3BR 2BA house on the near-east side of Indianapolis. I bought it using conventional financing, with 25% down, at 5% 30/30 terms. My mortgage payment is about $96 and I rent it out for $650/month.

However, when I tried to do it again, they (Fannie and Freddie) had altered their guidelines such that I could no longer qualify for a conventional investment property loan, even though I make $60K a year, live at home, and have no debt. Strange huh?

So I have been meeting with portfolio lenders, which essentially are smaller banks who hold onto the mortgages (and don't sell them) so they earn their money by the interest you pay for 30 years. But because I am so young, I have not had enough work experience for them to lend to me, so I have to build my portfolio another way.

That leads me to where I am now, which is finding an investment property that is also a property I can live in. This will give me 1) a place to call home and 2) more landlording experience and 3) more cash flow to prove that I am a competent real estate investor. Banks are horrible to deal with, and I have never enjoyed doing business with them. If you can find a way around it via lease options, seller financing, etc, I would DO IT NOW.

But it will come eventually. This is the price I pay for being a young guy trying to break in I suppose. In the mean time I will be trying to do 3 or 4 4-unit deals, and getting 16 or 20 units under my belt by paying 3.5% down payments. I have to win somehow, right!?