Real Estate Agent · Scottsdale, AZ · Member since 2016 · 53 posts · 10 votes
Hi. I'm exploring options on the best way to finance my first long-term rental property. I'm looking at traditional lending, hard money lending, private funding, etc. No money down would be awesome, but I also know it can be tough to get.
I'm curious to know what you guys did, and how it worked out for you? Any answers is very much appreciated. Thanks!
In my opinion, the best way for the first deal is househacking. Buy a multi family using FHA (4 unit preferably) and live in it, using the other three units to pay the mortgage. Not sure how prevalent a 4 unit is in Scottsdale, but, that's the best way to do it.
There are a bunch of loan products out there for fix and flip and then ultimately rent, but for many, you have to own a primary residence first. I didn't catch if you own a primary or not.
Real Estate Professional · Dublin, OH · Member since 2013 · 251 posts · 165 votes
9y
Hi Dalton,
Theres a bunch of companies these days that will fund long term rentals. Id look at Lima one (although their lending requirements just changed, 5 Arch, Visio, B2R, Jordan Capitol, Lending Home, etc.
Seems right now they all want some skin in the game. I used to be able to cash out entirely based on the asset, and since I'm a franchise of HomeVestors the "We Buy Ugly Houses" guys, and were really good at getting houses at a discount, Id be able to walk away with a profit in the refinance. Unfortunately though that model has changed it seems.
Private money is always cheaper and easier, but way more difficult to find. Ive had varied success with this in the past but never found that Rockefeller lender that would give me unlimited funds...such is the case with most I suspect.
In any event just gotta start talking to lenders and see what works, theres lots of different products out there.
In my opinion, the best way for the first deal is househacking. Buy a multi family using FHA (4 unit preferably) and live in it, using the other three units to pay the mortgage. Not sure how prevalent a 4 unit is in Scottsdale, but, that's the best way to do it.
There are a bunch of loan products out there for fix and flip and then ultimately rent, but for many, you have to own a primary residence first. I didn't catch if you own a primary or not.
Scottsdale , AZ · Member since 2015 · 52 posts · 18 votes
9y
@Stephanie P. thank you for the insights - my wife and I are planning to buy our first home as a 2-4 plex - live in one of the units and rent out the others. Both with excellent credit and well paying jobs - does that seem like a feasible plan to be able to get a traditional loan?
Question #2 if you have the option for hard money or bank loan which would be better suited?
Real Estate Agent · Scottsdale, AZ · Member since 2016 · 53 posts · 10 votes
9y
Thank you all for the replies.
@Jeffrey Hotz Thank you for your advice and the recommendations on some of the companies - I'll definitely check into it. Like you said - they all want some skin in the game and at the same time, my goal is to also make some profit so I'll have to do some research & crunch numbers.
For your question about being interested in the hard money - I was exploring all options when it comes to financing. Looking at the pros & cons of each program, how it benefits me, profitability, etc.
@Stephanie P. That is definitely one way to go about it. No I don't own my place yet, but I am currently looking for one. Not sure if this strategy would work for me but it's something I'll check into. Does the FHA require you to live within the complex in order to secure the loan for a 2-, 3-, or 4-plex units?