Hello Everyone. A newbie trying to get his first deal done.

[John T.]

      Hello everyone out there. My name is Johnny. I just want to introduce myself first, since I am going to be active here lately. I want to show my respect to everybody in BP, and thank beforehand any help I can get. 

      I am currently searching to buy my first multifamily property. It is time to pull the trigger for me and my wife. I live in Queens, New York. Unfortunately, prices in my area are crazy, so we narrowed it down to Jersey City, Union City or West New York. I am currently in talks with banks for mortgages. We both have full time jobs, our credit scores are very good, and we have some savings. 

     I have to be honest. I do not know if I would be able to find the right property, or get a good deal. I feel really like a rookie trying to play in the NBA. All that I know is that I made my mind already, and that I will not pay a rent for much longer. I would love to hear from investors in the places I mentioned before, maybe get some good and honest referrals to work with. I have the biggest respect for anybody that can help me to get a step closer to my goal, any suggestion or idea will be very welcome.  I saw some multifamilies, for prices we can afford. My mortgage broker from Citibank told me that in his opinion, I should put a 5% down, and keep some cash to still pay the closing cost, and keep some cash on me in case I need to do some work at the house, or in case things go a little ugly after the purchase. I thought It was always better to put 20% down, even if I keep very little in my bank account after that, because I was trying to avoid the PMI. He might be right, and since we are first time buyers, it makes sense. No matter what, I am open to any thoughts about it.

    I know that if I want to get a better deal I have to be willing to go into maybe not that desirable areas. The problem is that sometimes when I use the engine from realtor.com to verify crime areas, sometimes it is very red, and scary. I am sure I am not the only one worried about this. 

   I have some questions. What experience people here think about the down payment? Should I follow my mortgage broker advice, put only a 5% or 10% down,and hold some cash on me just in case, or should I try to put the 20% down, and save the PMI? , even if that means to barely have cash as a back up.

  What is your opinion about to hire an independent  mortgage broker ? Are they worth it ? 

   And the last one, what parts of Jersey city or Union city do you think are worth to invest now, or zip codes?

 I want to apologize  for any kind of grammar mistake in advance. English is not my first language. 

Thank you very much all

[David Cruice]

HI @John T..  I try to help you along by answering some of your questions, but I am not from your neck of woods so I'll not advise on where to invest, Union City, etc.  

(1) Follow your mortgage broker's advice and go with a low down payment on your first deal.  Always leave yourself with some cash reserves.

(2) Get yourself an independent mortgage broker - preferable one who specializes in, or at least is familiar with, FHA loan. Better yet, try to get your mortgage through a small regional bank or credit union in the area you are trying to invest in. The big banks are a nightmare to deal with should any last-minutes issues come up prior to closing.

(3) If you are able to live in the small MF that you are going to acquire, consider "house-hackng" and getting an FHA owner occupier loan with 3.5% down.

(4) Finally, don't be overly concerned about analyzing crime statistics online.  You'll only drive yourself crazy and scare yourself out of deal.  Pick 2 or 3 areas that you think you might like to invest and live in, then drive those areas on the weekends and evenings.  Get a feel for each area.  If you don't get a warm fuzzy feeling while you're in the area stay away from it.  Basically, as yourself a simple question:  Would I like to live here?  If the answer is "No", then find another area.

All the best with your first deal.