Buying my first home

[Sherelle Montague]

Hi all! 

I am going to be purchasing my first home in 8-6 months. I live in the Seattle area so 3.5% down on a multi is still way out of my price range as they go for about 800k and above.

My thought was to buy a 2-3 bedroom home in the Tacoma area as I can get in with 3.5% down and still be able to easily commute to my job here in Seattle (cheaper and more reliable than taking the ferry if I were to buy in the Kitsap county area). My plan is to live in the property for a year, do some renovations, and rent it out after the first year. My plan is to save so when the year is up I can get into another in the area, again for 3.5 percent down.

My main questions are

1. How should I be analyzing the property for future cashflow since I will be paying everything the first year? Aside from property taxes, and analyzing rents in the area what other key factors should I be looking at to establish cap rates and potential profit?

2. Will it be difficult to secure 3.5% down financing on the second home since I will have gotten a mortgage loan a year prior? 

I would love to hear anyone's success stories on this method since I cant start with a multi family locally and would still like to get in with a low down payment. As well as any referrals for great investor focused agents/financial institutions.

Thanks in advance everyone!

[Matthew Cullen]

Hi Sherelle - 

A second home at 3.5% will be hard as that sounds like you would need to do an FHA again (unless you are former military and have access to VA loands).

Are you familiar with Tacoma at all? I invest here and neighborhoods are extremely important. There is definitely value in the "up and coming" neighborhoods but you would have to set expectations as an owner occupant.