What options do I have?

[Tausen Richmond]

With no previous real estate experience. I am wanting to start out with a 4 plex. I have 100k for down payment. Just stated working again only making 25k a year. Is that even possible? What kind of financing can I get?

[Dave Arneson]

Hi Tausen, 

The things to understand here are that different property uses will drive different answers from lenders and different lenders might give you more grief depending upon what rules their company follows or puts into place. 

For your situation since you stated that you are just starting out and that you have amassed $100k (great job!) but your income is low for lending terms, so here are your options. 

You can go Owner Occupied (3.5%+ down) or Non-Owner Occupied (requires 25% down) in which case you'd be maxed out at $400,000. As you will quickly find $400k barely gets you are duplex in the Eugene, OR area so your best bet is to look at an owner occupied 4 plex. This way you have 3 more doors worth of rental income, docked by 25% goes towards your DTI and your Housing Ratio.

Illustration: 4 X 1,250 = $5,000 * 75% = 4,000 / month - 1 unit for you to live there = $3,000 in debt coverage.  So for a $550,000 purchase that would put you at $2,949/month with $88k down / .625% property taxes / $1,500 per year in insurance at an interest rate of 5.203%  

In Eugene you will have to hunt and it might be an older builder building with weird or smaller units but those are roughly the numbers that you'd want to start to factor for in more detail.  If you had more income or more down you would have more options but as of the limited info of $25k / year and $100k in cash you best bet would be to try to eliminate your housing costs and basically live for nearly free as an owner occupant.  Hope that helps you as you are getting started.  Dave