How often can I purchase a house using the BRRRR Method with 3-5% down?

[Quintin Tartell]

Howdy! I’m new to real estate investing and have been diligently listening to the podcast.

I am interested in expanding my real estate portfolio while minimizing the amount of cash I have to put down. I am curious about how frequently I can purchase a house using only 3-5% down payment. My lender has cautioned me that using first-time homebuyer funds to build a portfolio may raise concerns with banks. I would like to know what the FHA or conventional loan guidelines specify regarding this matter, as I want to ensure that my actions are lawful and legitimate.

It would be greatly appreciated if you could provide me with any relevant documentation or links.

[Brandon Gale]

@Quintin Tartell

There's a few things to consider here. 

You are only going to find a 3%-5% down payment on an owner occupied loan.

You can only have 1 FHA loan at a time, and for many other owner occupied loans it is the same.

You need to live in the property for 1 year on most owner occupied loans. 

You're lender is correct, many loan programs do not like to see you jumping frequently from property to property on owner occupied loans, they aren't technically meant for investing, though it is fine to do so if you follow the rules.

Lastly, doing a BRRRR on an owner occupied loan is very difficult and takes longer than typical BRRRR's. You will not find a bank that will let you cash-out-refinance to below 80-20 LTV, most wont let you go below 75-25. Since you are buying a house for 5% down, you would need to increase your equity at least 20% before you can even refinance, and that would be with no cash coming out.