Looking to Purchase Potential First Real Estate Investment

[Matthew Phillips]

Good Afternoon,

Looking for some advice on my first real estate investment.

Found a duplex that was just listed a couple weeks ago for $549,000. 4bd and 4ba at 2220 sq ft. Being a college student with limited funds for investing, what is some good advice for paying the downpayment. I've looked into some local county downpayment assistance programs, I've heard advice about using either private or hard money lenders, I've also been told that it could be possible to use a credit card for the downpayment if I've got a high enough credit score. Any personal experiences or advice?

I'm probably going to let the property sit for a little bit and see if they reduce the price more and then offer a slightly lower as well. It shouldn't need much work down to the property, if any. 

Appreciate the help,

Matthew Phillips

[Lawrence Potts]

Hey @Matthew Phillips, all good questions.

Typically hard money lenders are for short term financing solutions, they are not long term solutions. You would use hard money to acquire the property and then would refinance with conventional financing because hard money is very expensive to have but it is quicker to use to get a property. You’ll typically see house flippers use hard money.

If you want to owner occupy this, you can utilize FHA 3.5% down payment. Now you'll find yourself running into some hurdles, they'll want to see work history, paystubs, etc., to make sure you can make the payments. They'll want to see that your credit score reflects that as well.

I highly recommend reaching out to @Grant Schroeder, he’s an expert in owner occupied multifamily and has helped a lot of people start house hacking. 

I think it’s doable but you’ll probably find yourself needing co-signers and some assistance.

There are down payment assistant programs out there. Some are based off of income, others are for Native American tribes, etc., but typically they are grants given to cities/counties by the state. A good lender is always going to be looking out for these kinds of programs and will know if you qualify for them. I utilized one for my first purchase and it was game-changing. If you can qualify, I highly encourage to pursue it.

If you go through traditional financing, my understanding is that lenders will disqualify you for a mortgage if you’re going to use credit cards to use as a down payment. I think hard money lenders will not care, but traditional lenders will see that as highly risky and will reject your application. Always ask a good lender 👍

Lastly, private money is super helpful if you can get access to it. It takes a while, you have to network with a lot of people. My advice is to get plugged in to local real estate investing groups and:

1. Learn as much as you can. Ask all questions. Reach out to people. Read as much as you can. Take action everyday to learn something new.

2. Provide value to other people. Don’t expect anything in return. See how you can help. People like helping people that help them.

I hope that helps you out. Also note that sometimes it’s difficult to buy a multifamily for owner occupied buyers if all units are rented out because of eviction rules. Sometimes it takes 90 days to evict, and that may come in conflict with lenders as most want you moved in to the property within 60 days. And most sellers are not willing to go through an eviction process before closing because of the risk it might cause them. I’d love to hop on the phone with you and go over some other things about house hacking and the Newberg market, connections, lenders, etc. 

Keep posting! It makes everyone better 💪