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Updated over 4 years ago on . Most recent reply

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Gage Downey
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4
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To buy and RENT or to buy and FLIP - Nashville Real-estate

Gage Downey
Posted

Bigger pockets team,

My name is Gage Downey and I’m 25 years old. When corona hit, I had lost my APM job in residential construction of 60K/ year. 2 days before I was supposed to close on a house in Fairview, TN that was around 245K. With that house I was going to flip it and sell it. Fortunately, I was able to back out of that deal with the unknown and uncertainty of no income.

Since that event a lot of things have gone my way. I have secured a traveling superintendent job of 90k/ year. This is allowing me to save a substantial amount of money in the meantime since I have no expenses. I’m hoping to have 20k saved by December 2020. With that being said, I’m now looking at making an investment in the Nashville, TN area. My girlfriend and I live together, so I will need to accommodate her as well. For now, we are living with family to save money until the end of the year.

After scoping out the Nashville area I like these areas, (Bellevue, East Nashville and South Nashville) I have the capability of flipping a house even with my traveling job because I have the sub-contractors and skills to perform the work. I also made a lot of great contacts while I was in residential construction for 3 years prior to corona.

I like the idea of buying a 3-bedroom place that needs to be renovated and once renovated find 2 additional tenants. I feel confident in her ability to oversee everything while I’m not there plus she would help with rent. My goal is to propose to her over this next year and the following year get married. My thought is to buy another house if possible when we get married and keep this place to rent out.

  1. 1.) Should I buy and FLIP (with no tenants) or should I buy, renovate and then RENT (with tenants?)
  2. 2.) What type of loan should I aim for? No money down/FHA/Conventional, etc.?
  3. 3.) Should I do no money down and use my cash for rehabbing?
  4. 4.) Will my first mortgage need to be a certain type of loan to be considered a rental property?
  5. 5.) How do I get approved for a second mortgage in such short of time?

My ultimate goal is to have real-estate be my primary source of income, so I can leave m y 9-5. I’ve already been on the road for 1 month and its taking a toll on me. I could really use some help formulating an exit strategy from my 9-5. I would greatly appreciate any and all feedback.

Best regards,

Gage Downey

Most Popular Reply

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152
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Erica Larence-Penna
  • Attorney
  • Rhode Island
90
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152
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Erica Larence-Penna
  • Attorney
  • Rhode Island
Replied

@Gage Downey I highly suggest speaking to a lender to see what your options may be.  I work with some lenders in TN, so I'd be happy to connect you with someone.

Most lenders aren't going to lend less than 20% down on an investment property (I work with a couple who do), but if you are using it as your primary residence, you may be able to use an FHA loan and do 3.5% down. My fiancee and I purchased four-unit with a 3.5% down FHA loan; three units are rented out and we actually net about $200/month right now. I am actually an attorney and a couple of banks have "professional" mortgage programs that they offer attorneys, CPAs, doctors, dentists, engineers, etc. These loans have no/low down payment options and no PMI. So depending on your career or your girlfriend's career, there are specialty programs out there as well. We are in the process of purchasing our second house using one of these loans.

In terms of getting another loan in a short period of time, I would suggest having the mortgage for the first house in your name only and then on the next one, have it in your girlfriend's name.  You could also find another person to partner with on deals who may be willing to finance them.

Personally, I like the BRRRR or buy and hold strategies, but flipping is a great way to raise capital. If your goal is to eventually leave your 9-5/retire early, rental properties are going to give you the cash flow you'll need in order to do that. Everyone is different though, so it really just depends on what you prefer.

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