Good morning everyone, 

I am currently looking to put my first deal under contract in the Pacific NW (Portland Metro Area). So far, I have gotten a pre-approval for a $260,000 loan and started educating myself on many of the different options. I attended the FHA home owners education class and received the certificate of completion, so I am working with the lender on the 3.5% down and down payment assistance, so I have less money out of pocket and can focus more of my funds on renovation and increasing equity.

The properties I am looking at either have basements that are finished, or basements that I can finish myself to rent out separately either on a month to month basis, or as an AirBnB, or they have detached garages that are big enough to convert to a studio, or AirBnB. 

I am in need of some advice on a few things. First, I am considering doing multiple offers on a single property with different terms. The property is listed for $275,000 and is in a decent neighborhood with low to moderate crime. The house has a finished basement with an already sectioned off bedroom, bathroom, living room and a separate entrance from the rest of the house that I can rent out for around $800 per month, while living in the upstairs. It has been on the market for a little less than 30 days. My first offer, is $240,000 subject to my FHA financing going through. The second offer is, $300,000 seller financed at $1,200 per month for 250 months with a cash out option of $270,000 within the first 12 months.

I am curious which offer everyone thinks would be most beneficial for me in the end. The seller financing would save me a ton in interest payments and give me better cash flow because the FHA Loan would require payments of around $1,750 per month on a 30 year mortgage, although that would go down once I no longer require PMI. The benefits I see from the FHA loan are the ability to refinance after 1 year to help acquire more properties, and not having to deal with the previous owner on an ongoing basis. Any thoughts on benefits, or cons, of either way?

Second question, Should I go toward the top of my budget (qualified at $260,000 and currently looking at properties near that amount) at the start, or should I scale back and do a smaller property a little further away to test the waters and gain some experience with finding and managing tenants, but will allow me to easily afford the mortgage in the event of vacancy.

Any advice, or criticism, would be greatly appreciated. You guys are all awesome!

-Chris Christensen