How to finance the next multi

Question

Looking for insight from investor community. Thank you all for responses

Looking to finance my 3rd investment property. 1st deal was conventional. 2nd was fha house hack. Looking for options on 3rd. My thoughts below

Option 1, buy small multi with another conventional 20% down

Option 2 (will it work?) refinance after 12 months of my house hack from my fha into a conventional (I’ll have 20% forced equity in the deal by 1 year mark) and then buy another house hack with another fha loan

thanks feel free to DM me

Jennifer Kay · Answer

I see you are in CT. So am I. I am closing on my second multi in 2 weeks using Charter Oak. They allow as little as 5% down for owner occupied up to fourplex, and it does not need to be your first property, but they only finance properties in CT and RI.

Michael Doherty · Answer

@Jeff Puciato I would look to refi out of your FHA loan if the equity is there and repeat that. Or I would find a value add deal and fund it using hard money. Offer cash/hard money for the house (so you get a better price), rehab it and pull out your down payment or most of it. I know a few hard money lenders that will only require 10-15% down and fund 100% of the rehab.

Jared Rine · Answer

@Jeff Puciato..might be worth looking into a DSCR loan, depending on how many units you're buying and if you're okay buying for investment vs living in one the units (if 4 units or less).  I've done investment/DSCR deals in New Haven, CT and the market is great from the little I know about it.  OR you could call around to local banks/CU's and ask how they underwrite.  Sometimes banks might collect a full document package, but really when it comes down to it, are only underwriting the property (if you're buying for investment).  I have had this happen also with other clients - where we HAVE to collect everything more for a compliance edge vs. your personal income actually taken into account.  Just my $0.02

Jeff Puciato · Answer

The market I’m in is insane. Interest rates going up, home prices remain steady. Low inventory, high demand. I will keep in mind what you have said

thank you

Jeff Puciato · Answer

Thank you for the input. I do like DSCR loans and will look into it further

Jennifer Kay · Answer

it is a portfolio conventional loan held by the credit union and not repackaged/sold. It does conform to federal mortgage standards, however, it is not backed to my knowledge by the government.

William Collins · Answer

@Jeff Puciato

So there are a couple of missing details here Jeff that I would love to have to be able to give an educated opinion. What is the purpose of the next multi-unit buying. Are you intending to live inside multi? Do you have a reasonable clause for moving from one multi to another? (Technically you should have a reason to go from one FHA to another primary residence loan such as closer to work, change of living circumstance etcetera) what are your means for investing at this point in time? Also for your first and second properties what are your current interest rates?

Jeff Puciato · Answer

Is this an FHA loan, Conventional, or one not backed by fannie mae/freddie mac?

Thank you for your response and I'll certainly look into Charter Oak

Zach Edelman · Answer

DM'd you. Think I can help out!

Justin Hammerle · Answer

@Jeff Puciato - private sources are another option; there are private lenders that will focus on the metrics of the individual deal and not give too much weight to your existing debt load.

How to finance the next multi

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