Single Family Homeowner Purchasing 1st Multi-Family

[Justin Salgot]

I'm looking for some advice or ideas on some creative financing or experience with similar situations: Property is currently listed as a 2 unit, but I have learned it has 3 units including the finished basement (zoned for 2) as well as a large garage (>10,000 sq. Ft). For sale for $195,000. Each unit is ~2400 sq. ft! Built in early/mid-1800's stone structure, seems solid but have not yet had my inspector walk the property. This would be my first multi-family, but I currently own and inhabit a single family home. I have recently heard of USDA home loans, which have specific areas that qualify with the USDA as a form of agricultural development program in low populated or low developed areas (100% financing and lower interest rates); this home qualifies, but it has to be the only mortgage you will have until after you close (which disqualifies me as I own the single family property I currently live in). What I was shooting/hoping for: -Work with current owner (been on the market for 150+ days, negotiate seller concessions to minimize cash out of pocket), he is currently out of state and seems to want to get rid of the place for that reason. -Rent single family home (~$750/month for mortgage, taxes, insurance) for ~$1100 renter pays utilities which would give me a monthly margin of $350 -The multi-family(2-3?) home: I would plan to live in one unit, rent the other unit to a tenant along with a large garage included with the property, for $1250-$1600 combined -Finance the home ending up with an eventual mortgage payment (w/taxes & insurance) of roughly $1500/month -At minimum, have a margin of $100-$350, at the same time eliminate the cost of $750 of my current mortgage payment, so in reality to my lifestyle it would be +$850-$1200/month extra income. What I have been told is: -Buying 2nd or beyond property is considered an investment property; this requires a conventional loan and will not allow for USDA or FHA loan. -Conventional loan will require 20-25% down payment to qualify (I don't currently have $50k+ kicking around in my savings) What angle I am currently pursuing: -In talking with a creative real estate agent, I may be able to secure private capital, in the form of a gift for 6 months, after that time would start to accrue a payment of principal and interest -The home has been updated in the recent past, and has had a new roof installed ~6 years ago, newer utilities as well. -The value of the property is roughly $30k more than the sale price, which would empower me to secure an equity loan, and I could pay the private loan (gift) off after that six months. This seems to me to be a possibility still, but will take some creativity and perseverance. Let me know what you think about my situation or if this is something you have experienced in your time.