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Updated about 1 year ago, 10/28/2023
Information on good loans for buy and hold ?
Hey BP community what loans and loan programs are out there that you believe make the most sense for investor trying to get his first property ? Interested in acquiring a set up where I could live in one unit and rent out the other unit(s) of a property. May God bless you for giving advice on this subject !
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Quote from @Israel Wolterding:
Hey BP community what loans and loan programs are out there that you believe make the most sense for investor trying to get his first property ? Interested in acquiring a set up where I could live in one unit and rent out the other unit(s) of a property. May God bless you for giving advice on this subject !
The loan and interest rate might not be near as important as finding a great property at a great price that will cash at todays higher interest rates.
Quote from @John Underwood:
Quote from @Israel Wolterding:
Hey BP community what loans and loan programs are out there that you believe make the most sense for investor trying to get his first property ? Interested in acquiring a set up where I could live in one unit and rent out the other unit(s) of a property. May God bless you for giving advice on this subject !
The loan and interest rate might not be near as important as finding a great property at a great price that will cash at todays higher interest rates.
This all day. You'll want to focus much more on finding a great deal, possibly off-market. If you can find a seller-financed deal, even better!
I'm of the personal opinion of house hacking and doing a traditional FHA style loan on the first investment property, especially if you're a single guy and looking for a triplex or fourplex.
That being said, I didn't know seller financing was a thing when I got started. And today, I'd spend all my time networking and building relationships to find older investors in my area who are tired landlords looking to cash out without the tax hit and wouldn't mind carrying the note. But those deals are relational. Especially if you want a good interest rate to be negotiated.
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Hey @Israel Wolterding, exactly what @Michael Key said.
Using an FHA loan to buy a multifamily of some sort. A 4 plex for example.
Live in one, rent the other 3. Live free, save money, rehab empty units. After a year or so, refinance, rehab your unit, rent it out. Do another FHA loan and do it again.
After several of these you will have some performing multifamily buildings and saving up to move to another asset class. Like a STR.
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Yes - you should be looking into the classic FHA "House Hacking" loan where you put minimal down, live in one unit and rent the others
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Talk to a lot of mortgage brokers. As mentioned FHA is a popular option. There are sometimes low % down conventional for owner occupied. If by chance you are a veteran use a VA loan. If it is in a more rural area there are USDA loans. The interest rate will not be as important as the quality and location of the STR listing. Make sure you know the area demand and the competition and you could end up living for free and having other people pay your debt off.
I concur,
The deal is more important the rate. For the long term, I'd recommend a fix rate.
Find yourself a good lender who will provide options for the property.
Another vote for the FHA loan in which you can house hack.
If a house hack is the way you want to go, look at an FHA loan. This will allow you to use high leverage while buying your first house. You should check the House Hacking forum to learn about this strategy.
Quote from @John Underwood:
Quote from @Israel Wolterding:
Hey BP community what loans and loan programs are out there that you believe make the most sense for investor trying to get his first property ? Interested in acquiring a set up where I could live in one unit and rent out the other unit(s) of a property. May God bless you for giving advice on this subject !
The loan and interest rate might not be near as important as finding a great property at a great price that will cash at todays higher interest rates.
I’ve been hearing this a lot too. Thank you my friend, I’ll definitely keep this in mind when looking for a property. Hope you’re having a great day.
Quote from @Michael Key:
Quote from @John Underwood:
Quote from @Israel Wolterding:
Hey BP community what loans and loan programs are out there that you believe make the most sense for investor trying to get his first property ? Interested in acquiring a set up where I could live in one unit and rent out the other unit(s) of a property. May God bless you for giving advice on this subject !
The loan and interest rate might not be near as important as finding a great property at a great price that will cash at todays higher interest rates.
This all day. You'll want to focus much more on finding a great deal, possibly off-market. If you can find a seller-financed deal, even better!
I'm of the personal opinion of house hacking and doing a traditional FHA style loan on the first investment property, especially if you're a single guy and looking for a triplex or fourplex.
That being said, I didn't know seller financing was a thing when I got started. And today, I'd spend all my time networking and building relationships to find older investors in my area who are tired landlords looking to cash out without the tax hit and wouldn't mind carrying the note. But those deals are relational. Especially if you want a good interest rate to be negotiated.
I agree! Seller financing can be a big advantage, I’ll be looking into these deals more strategically. Thank you, I appreciate you helping me out!
Quote from @Michael Baum:
Hey @Israel Wolterding, exactly what @Michael Key said.
Using an FHA loan to buy a multifamily of some sort. A 4 plex for example.
Live in one, rent the other 3. Live free, save money, rehab empty units. After a year or so, refinance, rehab your unit, rent it out. Do another FHA loan and do it again.
After several of these you will have some performing multifamily buildings and saving up to move to another asset class. Like a STR.
This is exactly what I’m looking into now, I appreciate your help. It’s definitely steered me in the right direction. Hope you have a blessed day, thanks again.
Quote from @Robin Simon:
Yes - you should be looking into the classic FHA "House Hacking" loan where you put minimal down, live in one unit and rent the others
I appreciate it my friend, thank you. Have a great weekend.
Quote from @Zach Edelman:
Another vote for the FHA loan in which you can house hack.
Thank you my friend, I appreciate it. Hope you’re having a great weekend
Quote from @Zachary Ware:
If a house hack is the way you want to go, look at an FHA loan. This will allow you to use high leverage while buying your first house. You should check the House Hacking forum to learn about this strategy.
Been hearing this comment a lot. Will definitely get started on this, thank you. Have a blessed day and enjoy your weekend.
Quote from @Andrew Steffens:
Talk to a lot of mortgage brokers. As mentioned FHA is a popular option. There are sometimes low % down conventional for owner occupied. If by chance you are a veteran use a VA loan. If it is in a more rural area there are USDA loans. The interest rate will not be as important as the quality and location of the STR listing. Make sure you know the area demand and the competition and you could end up living for free and having other people pay your debt off.
I’ll definitely be keeping the location in mind then! Thank you Andrew, have a great rest of your weekend.
Quote from @Julien Jeannot:
I concur,
The deal is more important the rate. For the long term, I'd recommend a fix rate.
Find yourself a good lender who will provide options for the property.
I’ll be on the lookout for a fixed rate as well then. Thank you Julien, I appreciate it. Have a wonderful sunday.
FHA househack works but, ask your lender if it is realistic for your market. The FHA has something called a "self-sufficiency test" that is now killing many deals in my market. The main reason is that the prices on 3-4 units have gone up so much that it will not pass the test since the rents cannot support FHA's definition of "self-sufficiency". Ask the lender about this, if they say they never heard of it - find one that does because I have seen many deals here in the forums fall through due to this and also many of my househack investors have had to stop looking at Triplex and Quadplex and just do duplex since the rule doesn't apply to those. Do your due diligence on this and find a lender and agent familiar with househacking in your area so they can let you know if this could be an issue before you go into contract and spend all the time and money on inspections and appraisals. (BP Agent Finder is a good place to start).
That said - November 18th, The conventional loan downpayment on 2-4 unit properties will drop to 5% down with NO SELF-SUFFICIENCY test. This product might be a better option especially since you can drop the PMI at 20% equity. With FHA it stays on the loan forever.
I wish you best of luck. I househack myself and run a househack-focused real estate agent business and truly believe that it is the best way to get started! Just make sure to do your market research to save that $$$.
- Christopher Jason Lloyd
@Israel Wolterding If this is your first property, look into Down Payment Assistance programs for your state. That can help with getting into a property.
https://www.hud.gov/states/massachusetts/homeownership/buyin...
Quote from @Richard Elvin:
@Israel Wolterding If this is your first property, look into Down Payment Assistance programs for your state. That can help with getting into a property.
https://www.hud.gov/states/massachusetts/homeownership/buyin...
Thank you for sharing Richard, I appreciate it my friend. Hope you’re enjoying your weekend
Quote from @Christopher Jason Lloyd:
FHA househack works but, ask your lender if it is realistic for your market. The FHA has something called a "self-sufficiency test" that is now killing many deals in my market. The main reason is that the prices on 3-4 units have gone up so much that it will not pass the test since the rents cannot support FHA's definition of "self-sufficiency". Ask the lender about this, if they say they never heard of it - find one that does because I have seen many deals here in the forums fall through due to this and also many of my househack investors have had to stop looking at Triplex and Quadplex and just do duplex since the rule doesn't apply to those. Do your due diligence on this and find a lender and agent familiar with househacking in your area so they can let you know if this could be an issue before you go into contract and spend all the time and money on inspections and appraisals. (BP Agent Finder is a good place to start).
That said - November 18th, The conventional loan downpayment on 2-4 unit properties will drop to 5% down with NO SELF-SUFFICIENCY test. This product might be a better option especially since you can drop the PMI at 20% equity. With FHA it stays on the loan forever.
I wish you best of luck. I househack myself and run a househack-focused real estate agent business and truly believe that it is the best way to get started! Just make sure to do your market research to save that $$$.
Thank you Chris, I appreciate it. You’ve definitely taught me something new today. Will make sure to do my due diligence on my market and find the right lender to help me out with this method. Once again, I appreciate your help my friend, have a wonderful weekend.