Newbie from Saginaw, Michigan

Newbie from Saginaw, Michigan

Saginaw, MI · Member since 2016 · 8 posts · 1 vote

Hello everyone!

As of right now, I'm just beginning my journey into real estate. I'm currently a college student with another year and a half to go, and I'm studying finance. Really thinking that becoming a landlord is the path I'm interested in as of right now, however that may change as time progresses. The plethora of useful information on the site led me to want to become a member and join in on the conversations.

I've also been using what I've learned so far and have begun analyzing properties near to where I live to "hack" a house and save some money. Right now, I live in an apartment and am essentially throwing away money, so investing in a tri- or 4-plex would be ideal. However, like many others, I'm a broke college student. I've seen a lot about FHA loans and the FHA 203k, and I was wondering if anyone knew if I would be eligible for those as a student without a constant (I've never had more than one or two weeks off in the past few years, but I've changed between various internships and jobs to build a resume), long-term job? Would it even be a good decision for me at this point? My parents would likely be willing to help me financially, but I would much rather keep them from becoming involved.

Any thoughts and advice would be greatly appreciated. I'm really glad to be joining the community!

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  • Real Estate Agent · Port Huron, MI · Member since 2012 · 295 posts · 82 votes
    10y

    Welcome to BP!

  • Houston, TX · Member since 2013 · 1k+ posts · 114 votes
    10y

    Welcome to Biggerpockets @Nicholas Duncan! All the best on you real estate ventures!

  • Real Estate Agent · Jackson, MI · Member since 2016 · 22 posts · 3 votes
    10y

    Welcome, I just joined up yesterday!

  • Saginaw, MI · Member since 2016 · 8 posts · 1 vote
    10y

    Thank you all. Glad to be here!

  • Investor · Fenton, MI · Member since 2015 · 142 posts · 46 votes
    10y

    Welcome @Nicholas Duncan to the BP community. I applaud your efforts and thought processes on hacking a house as young as you are. You have already got a leg up on 99.6% of your college age counterparts by just finding this site and thinking the way you do. If you have already started to analyze properties, then you have probably already figured out that a well purchased tri or quadplex can allow you to live there for free and provide you a little cash-flow on the side. You probably also have noticed that Saginaw is pretty affordable area in many regards. That being said, if your parents are really in a position to help, I would convince them to lend you the 3-5% needed (probably like $5-8K) for an FHA loan and commit to them to use the cash flow to pay them back as quickly as possible. The analytical tools available here on BP (above under the Tools Tab) will give you plenty of financials to show your parents and you will probably impress them with your analysis and presentation if done properly. I do believe you will have to show some steady stream of income for FHA, unless your parents would also be willing to co-sign for you, but I do not know enough about FHA loans to even know if that is a possibility or not. Never stop dreaming or reaching for the stars; those that say that "they can't" are the only ones that are ever correct 100% of the time because that in itself is a self fulfilling prophecy. Best of luck to you and please keep the BP community informed along your journey!

  • Saginaw, MI · Member since 2016 · 8 posts · 1 vote
    10y

    Thank you for the advice @Cory Mccarthy! Saginaw is definitely pretty affordable, and so is the Bay City area as well. I've actually started looking at a 4-plex in Bay City just to practice running the numbers to see what might be a possibility. It's been discussed with them, but I think they need to be warmed up to the idea a little further because they don't have much experience in the area of property investment aside from owning their own home. I will definitely utilize the tools that BP offers, and I will try to get more information about the area while studying up on financing and being a landlord. Thank you again!

  • Investor · Fenton, MI · Member since 2015 · 142 posts · 46 votes
    10y

    @Nicholas DuncanGlad to help Nicholas.  Don't be afraid to reach out if you ever need any advice or direction, after all that is precisely what this BP community is really all about.  Best of luck to you and keep us all posted on your progress, we are rooting for your success!!

  • Flipper/Rehabber · Milford, MI · Member since 2015 · 23 posts · 2 votes
    10y

    Welcome Nicholas! Your strategy is perfect and is the exact same thing I'm currently trying to do. I was just pre-approved for an 30 year fixed FHA loan. They're going to look at 3 things:

    1. Credit Score above 660 I believe (if you don't have a credit card already get one immediately and start using it for gas and groceries - set up automatic payment from your checking account and DON'T MISS A PAYMENT!)  Research ways to improve your credit score

    2. Debt/Income Ratio - this could be a problem as you indicated... good thing about FHA is that you can use family money as a "gift" for a downpayment so I would recommend the same thing Cory did above with borrowing from your parents and paying them back using cash flow.

    3. Assets - If you don't have much collateral it will make it riskier for a lender to loan you money. FHA is definitely the way to go as the requirements are not as strict and it is intended for people exactly in your situation.

    The good news is that you're young and motivated.  Do your homework, find a realtor/lender that you trust and start the process sooner rather than later so that when you are ready and the right property comes along you can jump on it.

    I'm in the Detroit area if you ever want to meet up or have any questions.

  • Saginaw, MI · Member since 2016 · 8 posts · 1 vote
    10y

    @Andrew Abbott Congrats on getting the loan! I've actually had a credit card for around 5 years already, but I've never checked my credit score so I can't say as to what exactly it is at this point. However, I don't foresee it being low. 

    As for the family gift, I think I may be able to come up with the 3.5% required for and FHA loan. Since the area I'm in isn't too costly, I'm thinking that that will equate to roughly $2,000 or less, which is manageable for me. Have you done any research into an FHA 203k loan for any updates? It's something else that I'm exploring.

    I appreciate the advice and if I ever end up exploring that area, I'll try and contact you!

  • Flipper/Rehabber · Milford, MI · Member since 2015 · 23 posts · 2 votes
    10y

    @Nicholas Duncan don't forget to consider closing costs, lender fees, appraisal/inspection fees and property tax proration... these will all add to $ needed to close).  Closing costs could be considered as sellers concessions but lender fees and property taxes will have to come out of pocket.

    As far as 203k is concerned I understand the general concept but have heard from multiple people that it can become very complicated and involve a great deal of understanding and paperwork.  Maybe not suitable for a first time home buyer but don't let me deter you.  It's worth looking into.

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