3.5% down to buy an investment property is a misnomer

[Andrew Curro]

I often hear people say "I only had $10,000 and I was able to buy a duplex in a nice neighborhood with an FHA loan, you can do it too! It's that easy". Seems like this is disingenuous. They leave out closing costs, emergency fund, necessary renovation. Am I missing something?

I’m looking to buy a 2-4 unit in a class B neighborhood in Albany NY. These are currently going for $300K-$400K. I estimate that I’ll need $52,000 to cover down payment ($14K), closing costs ($18K), emergency fund ($10K), and necessary renovation ($10K).

Thanks for the help.

[Joshua Filkill]

18k closing costs seems way too high, you may want to double check with your lender on that. People do tend to focus only on the down payment and not other costs involved but there are definitely scenarios where 10k can buy a good owner occupy. I bought a duplex for 287k in an A- area with about 10k, but was given 5k in credits at closing from the seller. If inheriting any tenants you'll also get prorated rents from that month. If buying turnkey its very doable to get a place for 15k-20k without any credits, but yes you'll need to have an emergency fund.