House hacking with no down payment.

[Cory Shea]

My wife and I are currently living in an apartment 5 minutes from downtown Redlands, CA. We are looking to purchase a Multifamily (preferably close by) to use as a house hack within the next 3-6 months. Then put away the money we save from not paying rent into a savings fund for our next deal. Thing is, we don't have anything saved up and I am wondering if anyone has some advice on how we can get the down payment covered as well. I'd like to use either an FHA or 203 K loan.

I'm open to any constructive criticism or comments you have on this subject. I'm brand new to the world of real estate investing. But I'm excited to learn and grow along the way! 

[Brandon Rush]

Hey Cory,

Great to hear you are looking to get started. In your situation, I would not recommend you jump into a property until you have some savings in the bank. While its great that you can get into real estate with low money down, it will still require money for a few reasons:

* The bank will require you to have reserves in the bank (Maybe 6 months worth)
* You do not want to stretch yourself so thin that you are just getting by 
* Things break on/in houses. You want to make sure you have something save up for when those days come
* Vacancy. If you pick up a multifamily in an expensive market, having vacancy will hit you hard, especially if your renters are no longer covering the mortgage. 

My recommendation, speak with a lender on what will be required in order to purchase a property via an FHA. From there start your plan of attack. If they tell you, you need X amount for a down payment and reserves then there is your target. I know you probably really want to pick something up, but you have to be patient and be smart about it.

You are on your way. Keep chasing after it and good luck! Let me know if you have any questions.