24 and Looking to Purchase a Quad Within 2 years

[Sam Kammermeier]

Hi BP,

This is my first post on BP, and I'm excited to be part of such a great community.

I want to invest in a duplex, triplex or quad within the next two years. I'm looking for some advice on financing. If I put down 20% I avoid PMI, but I will most likely be saving up for a longer period of time to afford that high of a down payment, but if I put below 20% it becomes harder to cashflow due to higher mortgage payments and PMI.

I'm curious to see what you all have to say about it. Is it a better idea to wait and have a larger nest built up for a bigger down payment or is it better to start sooner with a lower downpayment but worse cashflow?

Thanks all for your help,

[Ramon Cuevas]

Hello Sam and welcome to BP. I am also a newbie investor myself and from reading your post, my advice would be to take action now rather than waiting to accumulate the larger down payment. I would suggest getting an FHA loan with a low down payment and house hacking which is a term commonly used here in BP which simply means living in one of the units. You should try and find a good enough deal where you would still cashflow even with PMI. Once you have occupied the property for one year, you can look into refinancing it into a conventional loan if there is enough equity from market appreciation and any repairs or upgrades that you have made since you owned it.