Quote from @Edwin Aguilar:
Hello all,
My wife and I are looking to invest in our first multifamily home. We're currently in the early stages of the process (i.e. haven't talked to a lender). We both have good credit scores but unfortunately due to our higher education, we also have debt. We've been in stable healthcare positions for >2 years now and are looking to utilize an FHA loan to purchase our first home. As of right now, we've been reading both "First-Time Home Buyers" and "Set For Life" by Scott Trench which has been incredibly helpful - to say the least. We've also been listening to a decent amount of podcasts regarding real estate and have talked to close friends that invest in the Worcester area.
That all being said, (1) my close friends that currently invest have told me that using an FHA loan to purchase a multi-family is unreasonable in this market - how true is this? Is conventional the only way? (2) We want to purchase a home where we'd be able to cover the mortgage costs (approximately $2,000-$2,300) in case we have tenant vacancies for an x amount of time. How realistic is purchasing a home in the South Shore for under $400,000 in this market? We've also considered Framingham, MA, and certain parts of Rhode Island too. Any advice or suggestions are welcomed!
Thank you!
If you are looking for your first home (as in you are currently paying rent). I would not say that using an FHA in this market (over conventional) is unreasonable. My 2 cents opinion is everything on the MLS is overpriced and not truly cash flowing (FHA OR conventional). However, the benefit of FHA is that you can get in with low money down. If you are a first-time homebuyer you might be able to buy a property with NO MONEY DOWN (in RI there are a ton of down payment assistance programs - and you can ask for the seller to cover the closing cost). I believe FHA is a great way to get into residential multifamily and at least start the journey. With FHA you have to live there for at least a year but if the market is truly at its peak (I am not a market timer but I am hearing this a lot), you can live there throughout the market downturn. You would be paying housing expenses somewhere else anyway, so why not put it into your multifamily. And it is great on-the-job training to get you started and hungry for more.
I live in Pawtucket in the Darlington area and love it! It is in a convenient area, and close to a park, restaurants, other amenities, highway, MA, and East Providence. We get awesome high rent for our 2 bedroom (it is a nice updated apt w/ granite countertops, stainless appliances etc).
Good luck and please keep us posted!
