not enough money for closing costs AND down payment...

[Brandon Ribeiro]

Hey BP, i'm looking to buy my first property and plan on house hacking it. The property is a 3 bed 2 bath in Manayunk going for 229k. It is fully rehabbed and in amazing shape- I know I can get 750 per room bringing the rental income to 1,500 covering the entire mortgage.

The only issue is that i dont have enough money for the closing costs and minimum 3.5% down... does anyone have any tips or advice for this situation?

[Nathan Gesner]

My advice: don't buy it.

You're trying to spend every penny you've got to put this deal together and then you won't have any money to deal with the little surprises life throws at us.

Every property I've purchased had a surprise maintenance issue that cost me thousands within the first few months. My first investment cost me $6,500 to buy and then $10,000 in repairs in the first three months (I got half of it back from insurance but it took a couple months). My next property required $8,000 for a new roof right after purchase. Next property was an unexpected $5,500 for a furnace and duct work. Next one was 11-units with four vacancies right after closing, three of those units required renovation, two furnaces needed to be replaced, and I spent almost $4,000 on plumbing in the first six months.

I read from other investors experiencing the same thing. They buy the property and then get hit with unexpected expenses within the first few months. You need to be able to purchase the property and have a reserve to handle what life throws at you. If you spend every dime just to get the deal, the entire thing could fall apart when you get hit with a major expense.