Purchasing multiple rental properties using FHA

[Donald Placide]

Hey BP family, as I stated in my goals, im trying to figure out how to build a large portfolio of rentals (for rental income of 5k+ monthly)in the NJ/NY area.

My situation; I've been making 40k a year for the past 3 years (steady job)

-this coming July I will hit 2 years since bankruptcy (so I should be fine in that aspect)

- I have about 15-20k liquid cash

-credit is slowly getting better at 620 now

So this summer I'll officially be looking to purchase multi-family home in NJ area, I picked NJ cause a lot of REO dupelx/triplex are going for under 150k. I guess the reason is the area is not so great BUT there are some beginning signs of gentrification. my questions;

-How can set my self up to for purchase additional property after my first purchase?

-how many times can use a FHA loan (I plan to live one of my units)

-Should I ask FHA for additional funds on top on the mortgage to cover unexpected cost?

-can own all the proprieties my self or do I have to partners with other investors ?

-should I use Section 8 tenants since it give more of a guaranteed cash flow

-should I try and do two closings at the same time ?

Any insight, opinions, links, suggestions are all welcomed, thanks everyone !

[Steve Wilcox]

Hey @Donald Placide you are way ahead of yourself. Others have given you solid info on FHA, limits, ect and the best bet is to get it from the horses mouth and call a banker

Focus on navigating the first deal successfully and build from there. You do not need to know what your going to be doing for your 5th or 6th deal when you have not closed one yet. 

FHA is for owner occupants only, you must live in the property for at least 1 year. The areas with live-able triplexs selling for under $150k in north jersey are ROUGH.

After you have navigated your first deal you can reevaluate your goals with all the new knowledge you have acquired from doing one transaction. It is important to set a destination or goal, but also do not get to bogged down with details that are irrelevant to you at this stage of the game. 

Here are some action steps to take:

1. Talk to a few mortgage brokers and bankers and see what you personally could qualify for. Keep in mind any traditional purchase of investment property will require 20-30% down in the current market, but an owner occupant can purchase with FHA loan for 3.5% down. Consider living in the property, based on your cash it may be your only option.

2. Go out and look at some of the areas you are planning to invest in, take a few hours and drive around the area, do some online research about the area, and if you like it start making offers. 

I invest in Newark, NJ and am knowledgeable on that city as are others on the forum who can chime in to specific questions.