First investment property

[Toneisha Covington]

I have an opportunity to purchase a 3bed 2 bath home for $35k and needs about $15k-$20k in repairs. The ARV is $100k. I have held out on purchasing my own home since I've gotten into real estate. Should I use my first time buyer\FHA option to purchase this investment property? I only have about 8k for a down payment but have excellent credit. Any advice? Thanks!

[Matthew Irish-Jones]

@Toneisha Covington it can be really hard to use an FHA loan on a home that needs a lot of work, if not impossible. Since they are allowing a lower down payment there is naturally more risk, so taking on a risky investment on top of the lower down payment risk is probably not going to work. I am not an FHA expert but, that is my understanding. FHA also requires you to live in the property.

If you only have 8K you will most likely need to finance the rehab costs as well. Your options would be a partner with cash and experience, a partner who will just lend the cash, a Hard Money Lender, or a bank who will provide an ARV loan. Banks are usually the most difficult to work with in these situations and you have to have a relationship, some history doing deals with the bank, or perhaps in some cases a deal that is so good a portfolio lending bank would go for it.

You may need to spend some time reviewing all of the possible financing options for your situation.