Ways to purchase second home for 5?

[Cody Cavenaugh]

Hi y'all, I purchased my first property last year and am up roughly 100K on it. I'm looking to pull equity from that and to buy a second home to rent out as an investment property. I'm a college student and want to buy another property to rent out to my fraternity brothers next year. What loan options would be best for me? So far the only option I can think of is 1.FHA 3.5%, I ideally want to purchase my second home at 5% down. Is it possible todo a second home conventional loan for 5%? What would be my best bet? Thanks Cody

[Theresa Harris]

You might be able to buy it for 5% if you move into it and use the first one as a rental.  I'd be careful who you rent it out to.  Often renting to friends is a bad idea-what if they stop paying the rent, are you willing to evict them?  Also do you want it to be a party house?  You could look at renting by the room.

You also have to know if the banks will lend you more money.  Refinancing, they might not let you pull out all of the money. Often they will do 75% or 80% of the value of the home.