Self-Employed and Low Prices: Am I going to have to get creative?

[Blake Cormier]

Hi all! I'm just getting into REI and I'm looking to get my ducks in a row before just diving in. In doing my research, I've come across some potential snags that I wanted to get your advice on.

MY GOALS: Within the next 6-8 months, purchase a duplex or triplex to owner-occupy. Within the next 2-3 years, purchase 2 additional small multifamilies in the area possibly via BRRRR. Primary goal is cashflow

THE MARKET: Corning, NY, population 11,000. The rental market seems to be strong especially for well-equipped units. The city of Corning is definitely considered to be more upscale than Elmira (pop 30k) and the surrounding rural communities. Rents range from around $600 for a 1br in a C- complex to $1200 for a 2br in a nicely equipped townhouse community right downtown. I'd plan on targeting the $800-1000 market as far as finishes and amenities (off street parking, W/D in unit, etc.) not incl. utilities.

Home prices seem quite low especially in the areas zoned for small multifamily. Un-rehabbed duplexes are routinely seen on the MLS for sub-100k, and a move-in ready one can be had for $100-$150k. More on this later.

MY SITUATION: I am (mostly) self employed as a marketing consultant/copywriter. I say mostly because I have one client who pays me a monthly retainer on a W2 ($14k per year), while my largest client pays me the equivalent of $60k a year but not W2. I have another ~$10k a year coming in from other freelance gigs (also non-w2). I don't have many expenses so ~80% of this shows up as net income on my books.

Currently have $60k in savings and liquid investments (ETFs). We are very frugal and able to save more than 50% on average. FICO score is in the high 700s, though I've never had an installment loan, just CCs.

MY PROBLEMS/QUESTIONS:

I started my consulting business as a side gig about three years ago and just took it full time this past August/September, so while I have several years of Schedule C's for the same business, none of them are going to show my current full income just yet.

By the time we are ready to buy we will have plenty of cash saved up, but I don't want to invest $(all my money) in my first deal so I would rather finance or at least have a refi lined up quickly.

My question is: Given all these numbers, what would be the best strategy to get started with the househack? Should I buy a distressed property with cash or hard money and then try to refi into a conventional or FHA? Or is that going to be off the table with my income issues?

Would a non-QM loan be a better option? Will a broker even look twice at me if we're talking about such a small amount of money? (possibly sub-100k) Can I rehab+refi with that or would I be better off buying something more on the turnkey end of the spectrum? (Say $5k in mostly cosmetic stuff to value add).

Thanks in advance for any advice you have!