Chattanooga First Time Buyer

[Coty Dowell]

Hi BP community,

I am looking to connect and get some guidance from the BP family here.  I'm a recent college graduate with minimal cash on hand for the moment.  I have a plan, but does anyone have any suggestions on executing my first deal differently?

My plan: I have been actively looking and visiting properties for sale in the Chattanooga, TN area. More specifically, I'm looking for a du-, tri-, or quad-plex. I was thinking of using an FHA loan with a THDA assistance program for the down payment. I will be staying in one unit while renting out the other unit(s). If possible, I will also be renting out the extra bedroom (if there is one) in the unit I will be occupying.

My questions: To learn the ways of land lording, does anyone suggest doing a du-, tri-, or quad-plex over the other? Should I stick with a SFH and house hack the extra bedrooms? Would you suggest the FHA route to financing, or would you go a different route for creative financing?

Any and all help is greatly appreciated!

Coty Dowell

[Jon Q.]

If you invest with less than 20% down, you're taking on additional risk. You will also need money for a rehab, so I would not recommend investing in anything without having at least 25% of the purchase price in cash.  Even if you can buy with no money down, I would not recommend it.  If problems happen, you'll have no buffer of cash to fix it.

The "no money down" is something real estate sales people with no experience sell newbies.  It doesn't really exist.  Even if you are able to buy a house with "no money down", if you have a problem and no way to fix it, you're headed to foreclosure and another 7 years until your credit score is back up so you can obtain financing again. 

Instead, ready "Richest Man in Babylon" and "How I Turned $1,000 into a Million in Real Estate in My Spare Time" (the original version by William Nickerson), and begin putting together a definite conservative plan to build a real estate investment business with low risk of having to declare bankruptcy.  Anything worthwhile requires patience and hard work. There are no shortcuts.  Accept that, then do what you must to get what you want.

You seem to still be at step 1 my friend.  Try to get to step 2, then step 3.

1. Don't know what you don't know (high-risk)

2. Know what you don't know (lower-risk) 

3. Know/experienced a little (medium-risk) 

Finally, work on these pieces so you are able and willing to take action.

All human endeavors are accomplished with...

Definite plans (a clear plan from here to there) + Faith (knowing you can) + Emotion (feeling you can) + Action (taking action) = Achievement of anything