Philadelphia, PA · Member since 2017 · 24 posts · 1 vote
I really want to start in investing into a multi-family home using an FHA. I will be house-hacking. I'm looking for a property to be between $150,000-$200,000. I'm stuck on how to start. My questions are:
1.)Where do start my search? (I have been using zillow, trulia, and Redfin). Are these websites are a great way to start searching?
2.)When do I know it is a good deal to purchase the property?
3.)Can I use an FHA loan if I'm living in one unit and I'm renting out the other?
Thank you!
1) Yes those are good places to start, or hire a real estate agent.
2) You'll need to find something that's essentially move-in ready for you to use an FHA loan. Something that's in average or better condition with 3 units occupied getting good rents, and one unit vacant would be ideal, but hard to find.
3) Yes, you have to occupy the property to qualify for an FHA loan.
1) Yes those are good places to start, or hire a real estate agent.
2) You'll need to find something that's essentially move-in ready for you to use an FHA loan. Something that's in average or better condition with 3 units occupied getting good rents, and one unit vacant would be ideal, but hard to find.
3) Yes, you have to occupy the property to qualify for an FHA loan.
Thank you for the response Mark. How focused should I worry about location in the Philadelphia area? I currently live in brewerytown and I know with 200,000 it will be difficult to purchase a home in that area. Should I focus on up and coming areas and spend more money?
1. If you're a newbie, hire a good realtor who understands your investment criteria and understands the rental market as well. They could spot potential opportunities for you like the current tenants aren't paying market value or a 2 bedroom can be converted to a 3 bedroom.
2. That depends on your criteria. Lots of people look for $200 a door after counting for all expenses, but if you just want to live for free then your goals change.
3. Yes you need to occupy for 1 year. Then you can move out or refinance out of it to do all over again.
Thank you for the information Chris. Do you have a tip of where I can find a great real estate agent?
Zillow is a good start. I found one of my good ones on there. They have stats on the realtors like the amount of sales they do and reviews from clients. Find someone with high numbers and great reviews.
One question I like to ask mine is if they own any rentals themselves. You want someone who owns property as well so they understand what you're trying to accomplish. Not someone who looks at you funny when you ask then about CAP rates.
Great question to ask a realtor. I have another question. How much money do you think I should save to be safe before purchasing a property that is roughly $200,000 using an FHA loan (including down payment, closing cost, and if the house needs minor repairs)? Sorry for so many questions this is my first time using BiggerPockets discussion board and I'm just so happy to get great feedback!
Some great Q&A in regards to House Hacking using FHA. Depending on condition most of the time and best on the tight inventory you might want to consider FNMA Homeready or Freddie Home Possible. Both have relevant down payments, seller assistance consideration, lender credit options and gift money allowance. The difference is that they are conventional lending products and do not follow a FHA appraisal is sometimes or all of the of the time scrutinized. In addition, there are some zip code and income determinations on the conventional products based on your pre-qualification. Identifying a multi unit based on your price point also narrows your neighborhood search and having the correct agent that identifies with those neighborhoods is vital.
Thank you for the response Joseph. I never heard of the FNMA Homeready or Freddie Home. I will have to do a some research. I noticed that you will be attending the Coffee and Cash on front st. tomorrow. I will be there as well. Hopefully we can chat!