All Forum Posts by: Ben Nelson

Thanks Kevin! 

@Kevin Zolea,

I have a few questions for you if you have the time to reply :) 

Update: I spoke with two more lenders this morning, and both were unable to offer me the criteria I listed in my original post. When talking conventional loans, it seems that Freddie/Fannie want a down payment of 20-25% on 3-4 unit multifamily even if the property will be my primary residence (I'm unwilling to put down that much cash if I'm living there... that's one of the benefits of a house hack right?). 

Question for Kevin: My question for you Kevin is were you to obtain the exact criteria listed below (or better) on your house hack? Perhaps you bought single family (not 3-4 units), went with an 3.5% down FHA loan (not conventional), a higher down payment (not 5%), or had a higher interest (above 2.75%)? I'm still not seeing my criteria all come together with lenders. I'm hopeful this can still be achieved, but part of the reason for my post is that I don't want myself (or others) to chase something that's unrealistic.

Criteria:

1. 30-year fixed conventional loan

2. 2.75% interest rate or better

3. 5% down payment or less

4. (ADDED/NEW) 3-4 unit multifamily property

Additional Information: I found an old post on BP that I think this is enough to solve my mystery... "5% down on conventional is the best way to go if you're going to buy a single unit because mortgage insurance is going to be significantly less, improving your cash flow. Standard conventional financing though, requires 15% down for 2 units and 25% down for 3-4 units." (Original poster Stephanie P.) This seems to be the reason why lenders are unable to work with me on a conventional loan with only 5% down. It's because I'm looking at 4-plexes that would require 25% down. 

I hope this helps others, and I look forward to any replies!

Ben

Hello BP!

I'm planning to do my first house hack in early 2021. Most of my research WANTS me to believe that an FHA loan is my best option (said differently, this is easily the most common recommendation or loan mentioned)... but I'm not convinced. For an individual with high cash on hand (25% of property value), an excellent credit score rating (800+), and a willingness to live in the property to get the primary residence interest rate, is FHA really the best option? Wouldn't it make far more sense to put down 5% and hold cash through a conventional loan or even put down 20-25% to avoid PMI through conventional?

I'd love to read other's thoughts on this, as I think most first-time house hackers may not have a lot of cash to invest with and likely that's why FHA loans look more appealing to help people get started. But in reality, if you have the cash and a good credit score, isn't it in your best interest to go conventional if you are chasing a healthy cash flow?

Thanks for your replies in advance!     

Ben

These are all very helpful comments, thank you all. I have a call with a new lender scheduled for tomorrow. Happy to report back on how it goes to close the loop on this thread. 

Hi folks! I'm preparing to do my first house hack in 2021 (moving into a multi-family property and property managing myself), but I'm having some trouble when talking with lenders. In order for my potential investment to look great on paper, I need to find a lender that is willing to agree to the following loan criteria with me: 

1. 30-year fixed conventional loan

2. 2.75% interest rate or better

3. 5% down payment or less

I'm in excellent standing as far as credit score (800+), cash reserves, and I'm debt-free including my current home. What am I missing? Is it realistic to think that I can find a lender that will give me a loan that meets the criteria I listed above, or should I start thinking differently? I have already worked through the pre-approval process with two lenders without success, but think I may just need to keep looking around... 

I appreciate any advice on this topic, especially if you can share experience or new ideas that might apply to my situation. Thanks in advance!

Hi Mark, thanks for the reply! I really appreciate the website you shared, as I had not come across that resource yet in my own research but I love the focus on house hacking. Much appreciated!

I'd love to brainstorm with this group the best possible RE investing strategy for someone with the follow investing potential: 

Current Status

Debt: None (includes home, car, student loan, and credit cards)

Savings: 150k 

Credit Score: 800+

Other considerations: Willing to move

What RE investing strategy/plan works best for someone like this to maximize ROI? My hunch is that house hacking a multi-family home between 400-600k, as this would allow for a primary residence interest rate (sub-2.75%), avoid PMI (20% down = approximately 100k), and allow for 3-6 months of reserves. What do others recommend? What am I not thinking of that should be considered?

A close friend of mine is having trouble getting started in their RE investing journey because of the typical "analysis paralysis". Given the above situation, what RE investing strategies would others recommend... or is this the "right" one? I think they should be aggressive right from the start, learn how to property manage and place tenants themself, and after one year in a multi-family property move on to the next one. 

Thanks in advance for your thoughts, I look forward to the discussion!