How much is too much for your first purchase?

[Nyle Emerson]

Hi guys, 

About myself; I'm a Philly native who's been living in Brooklyn for about 12 years. 33 y/o, single, no kids, and employed full-time working remotely. I'm looking to House Hack a multi-family in Philly or East Brooklyn where I currently live. I have an excellent credit score, and make mid-six figures, with cash reserves, a 401k, and a stock portfolio. I'd like to put about half of my cash savings towards my first investment. My long-term goal is to Buy and Hold or BRRR, to create a portfolio of rental units that will help support my mom with retirement. My short-term goal is to find a place to live, as I'm currently on a month-to-month lease.

There are two things that I recently discovered that threw me for a loop.

1)Wait, I qualify for how much???
The past five months I've been looking at homes in Philly's C/D areas for $200-$300k, to reno with a 203k and some sweat equity. Recently, I reached out to my broker at Cross Country and became aware that I qualify for over 700k mortgage through FHA. Which would allow me to purchase in Brooklyn. However, I could only afford a property this expensive if I can wrap the closing costs into the mortgage via seller's assist.

I'd love to purchase a home here, maybe in East New York or Flatbush. On the flip side, it would also allow me to cop a really nice turn-key triplex or quadplex on the University of Pennsylvania campus in West Philly for that amount. However, I'm wondering is it financially irresponsible to take out such a large mortgage for my first time purchase?

2) Bank of America will give me free money??

The second thing I recently discovered is the BOFA Affordable Solutions program. When I learned that I could get a $17k towards closing and downpayment costs, I was instantly interested. The downsides are that (1) The rate is a little higher at 3.2%, and (2) I make too much money for Philly or NYC. To use this loan I'd have to look in Newark, East Orange, Long Island, Hudson Valley, or even in Oakland where my job's headquarters are based. I'm open to living in any of these places for the next year if it makes more sense to go this way instead of an FHA.

So that's the gist. Right now I feel like I've got a case of "analysis paralysis" and information overload. I'd love to get your advice to put things in perspective.

[Nyle Emerson]

Thanks guys, this is my first real post and I appreciate all of the quick responses and advice. 

@Jonathan Rivera, when I say "house-hacking" I'm not referring to living rent-free, but merely being an owner occupant in MFH home, and using the tenants to subsidize my rent. Your advice about "putting on your mask first" hits home. I think I am trying to do two things at once, really appreciate that advice.

@Alex Uman, thanks, man! I've been looking at homes in Cobbs Creek, Mantua, Powelton, Belmont, in the $200-$300k range. Most of them I projected to cashflow $5k/year. I've heard that appreciation is less important than cashflow when looking at properties. There are a couple of triplexes/quads in University City for 500k -600k (turnkey), that cashflow around $11k/year. U City seems like a solid choice in case the bubble does burst, college kids and grad students will always have $$ and need a place to stay. That's what I've been telling myself, but I like your advice of taking less risk, and not biting off more than I can chew. 

@Steven Foster Wilson my goal is cash flow, and I know the Midwest and down south are my best bets for rent equity. However, since I'm looking to use owner-occupant loans, I'd like to stay on the coasts. Call me bougie, but I'm not living in Columbus for a year. Maybe a turn-key investment somewhere down the line.

@Joseph Gordon let's link bro,

@Jaron Walling, yes, thanks for saying it. I'm very new to real estate, but every day I get floods of articles and Youtubers saying the bubble is about to pop in 2021. The only thing is that they've been saying that since 2018 and it still hasn't happened. Your "what's the rush" comment brings me a lot of relief. I work remotely, so I could be chilling in Malibu or something rn, and still saving money. On the flips side, however, NYC prices have been dipping. But experts also say "don't try to time the market." So I'm trying to figure out if I should make a conservative move right now, or wait a while. Your comment is another tic in favor of "pump the brakes and see what happens."

@Brendan McAllister I'm definitely down to buy a MFH that can be fixed up with a streamline 203k or Fannie Mae Homestyle. Especially if I can find one on a nice block in an opportunity zone, so I can get 50k streamline/limited instead of the usual 35k. Would love to force the equity. Right now, I don't have enough cash to purchase a property unless I go to a sheriff sale and hope for the best. Thanks for the articles, will definitely check them out.