How to get started with real estate and renting out house?

[Natasha B.]

I want to do get a multi family house. I heard I need good credit and would have to have a down payment. I learn I could go to a lender. They would give me the money and I would pay them back. I have good credit, but not the down payment yet. Is this a good idea? I don’t want to live in the house. Am I going in the right direction about this? By having a good credit score, planning to save 10,000 or more and or getting help from a mortgage lender? My income isn’t 50,000 a year. But I do get a W2.

Please let me know. How should I start? Is the people I borrow called hard money mortgage lenders?

Thank you 

[Nathan Gesner]

A hard money lender will charge high fees, much higher than a bank. They are typically only used for a short period of time, like when someone needs capital to purchase and renovate a house they intend to sell for a profit in 3-6 months (flipping). These loans are not intended for buy-and-hold properties.

You need money. If you will not live in the property, you will typically require 20% down.

Save up and keep educating yourself.

[Katie Phillips]

@Natasha B. Like Nathan said, a multi-family that you do not live in will require 20-25% down, so you will need to save a lot more before purchasing a property. Depending on where you live, $10,000 could be a sufficient down payment for a primary residence. 

If you quality, you should consider a conventional loan or an FHA loan. These types of loans will have much lower interest rates than a hard money lender. For example, typical rate right now for a conventional loan is about 3-3.5% (depending on financial status), but the interest rate on a hard money loan can be as high as 25-30%. Please message me if you want to talk in more detail about your options. Hope that helps!