First Investment help

[Ryan Bolesky]

Good afternoon, this is my first post on the bigger pockets forums. ive been a long time listener to the podcasts and have spent the better part of this last year researching, reading, and learning about investing in real estate. I'm finally ready to make my first investment but was looking for a little help.

My first deal would be a 2 family property in Upstate New York, Saratoga County area, my parents own a two family apartment that is almost paid off. They are willing to sell it to me and I want to use it as a rental property. I'm currently living in one of the units, and being a first time home buyer I was wondering what my best option is for buying this property.

similar houses in the local area are selling for about 120k and up, my parents are willing so sell to me for 20% under market value. They dont owe that much on their mortgage. After fixing up both the units (which I have already done) I can easily ask 850$ a month in rent for each. The house has off street parking, is close to the main school district, and walking distance to downtown.

My question is, being a first time home buyer, how can I use this best as a beginning investment property? Should I use an FHA Loan, Or conventional loan? my plan would be to move out after purchashing, and using money I get from refinancing to purchase another Investment property. and keeping a good cash flow on the house.

Hopefully this all made sense as I'm new to this, any help would be appreciated. Thanks again'

Sincerely, Ryan

[William Glass]

Hi Ryan, That is very exciting and glad you are ready to make the plunge as an investor! Like you I am a newer investor with 1 land deal and a house hack duplex. I can easily answer your question about financing though. If you are planning on moving out after purchasing you cannot use an FHA loan. It is only for primary residences so you would have to continue to live on one side for at least a year.

Overall, I think this is a great first deal and you have a lot of safety built in thanks to your parents willing to sell 20% under market value. I recommend you discuss with other investors on BP and even call up a local mortgage broker to understand what types of loan products they have. I was in a similar situation as you wanting to buy a duplex, but not as a primary residence. After I did the numbers I realized it made more sense early on to go FHA and house hack based on my goals. I could have done a conventional non-owner occupied loan but the amount of cash needed up front didn't make sense so I chose FHA and couldn't be happier.

Figure out the difference in the amount of cash to close that you would need, but that being said your parents may be willing to provide a second loan to you in order to cover the down payment. I believe they would have to write up a note, but don't take my word for it I am not an attorney and best to consult a legal professional. That being said I would explore some creative ways to finance the deal. 

Regardless congratulations and good luck!