first financing- hard money/private lender or traditional loan

[Lucas Hallenbeck]

Im new to real estate and have been looking at different ways of getting funding and am not sure which method to pursue. Any input would be great and any dos and donts. thanks for time everyone have a great day and happy investing-luke 

[John Leavelle]

Howdy @Lucas Hallenbeck

What you are going to find is it is difficult to achieve positive Cash Flow while using the House Hack strategy.  You are only receiving 50% (Duplex) or 66% (Triplex) of the potential income while you are living there.  If you can get into a 4plex you have a greater chance of some positive Cash Flow.  Many investors that use this strategy accept they are basically only having their mortgage payment paid by the tenants.

It is a good strategy in order to get into the game.  You must conduct 2 analysis with this strategy.  First as if you are not living there to determine if it will Cash Flow.  Second, with you living there to determine if you can afford the remaining expense amount with your current income.

As far as the private mortgage insurance (PMI) it is required if you have less than 20% equity in the property. When you purchase with an FHA loan and a 3.5% down payment you will need to pay PMI until your equity increases another 16.5%.