New member from Duluth, MN

[Evan Trang]

Hi Everyone,

I'm Evan from Duluth, Minnesota. I moved from NYC a year ago. My partner and I made the move to save as much money as possible for the next couple of years to invest in real estate. We are currently renting. The standard of living here is much lower than NYC and we hope to save $100,000 in 3 years to invest. We want to go the owner-occupy route in a multi-family to start. We don't know where we want to live and invest yet. We are sure that we don't want to live here long term. We are just saving money and educating ourselves about real estate investing in the meantime. My plan is to invest in an owner-occupy multi-family with an FHA loan, and use our savings to fix and flip for liquid capital to buy more properties for rental. Rinse and repeat. One of my concerns is having so much "skin in the game". Should I leverage the fix and flips with loans or use our own money to save on points and interests?

Any suggestions would be greatly appreciated.  Thank you.

[Conor Hesch]

Hello @Evan Trang....I would buy a duplex (owner occupied) using the loan I used to buy my Duplex in Minneapolis MN. Here is what I did. (way better than FHA)

1. Buy a Duplex. Use the loan that I just used to buy my first duplex in MN: Portfolio-Conventional Loan with only 3% Down Payment and NO Mortgage Insurance (yes this loan really exists). This will make your monthly payment way lower than an FHA Loan. The only loan other than this that I know of that would allow less down-payment would be a Veteran Loan (Vets only).
2. Don't start with an FHA Loan, instead use it for your 2nd Duplex...because the 3% down Portfolio Conventional loan that I used requires that you do not own any other homes at time of closing. So start with that one, then move to a 3.5% down FHA. Once you have an FHA loan you are not allowed to have another FHA loan unless relocating a great distance for work. FHA does not mind if you already have another home as long as it is not already FHA…make sense?So if you follow that order you can maximize your options.
3. Now that you have exhausted your Low Down Payment Options (Portfolio-Conventional and FHA) you will need to use a Standard Conventional Loan and put 20% down to get your 3rd Duplex.
4. The sky is the limit...you could continue to buy properties and build an empire or just stop there and enjoy more free time...I have friend who quit his job and just manages his properties now.

Be alert, if you time it right you might be able to get down payment assistance/grants (I got $5,000 from a local program and used it to buy my interest rate down to 3.125% which is way below typical market rates for a Duplex). There are also many down payment grants for first time home buyers in various cities around the US. My 250k Duplex total payment = 1,480 and the lower level pays me 1,200 while I live upstairs. When my girlfriend moves in she might pay 280 and then I will be saving for my next duplex

Keep in mind that this 4 step process I outlined takes time (anywhere from 1 to 10yrs depending on the person) so keep the big picture in mind but don't let it stress you out too much. Send me a message if you have any more questions or need specifics and keep us posted on your success! GOOD LUCK !