All Forum Posts by: Christian M. Conroy

@Justin Lanciault - The logic I had initially been using was that I'd be able to maximize my cash return on investment by having lower investment up front. And it would allow me to potentially start building wealth off of the cash flow sooner than if I was more in the hole from a higher down payment. That was me operating under the assumption that the choices were either a 3.5% FHA loan for a duplex, for example, or a 20% conventional loan.

Maybe that was incorrect? Sounds like you're saying that it is not as hard to get a lower down percent conventional as I originally thought? 

@Justin Lanciault Would I be able to get my FHA loan ability back to be able to use on another place in that scenario? I was under the impression that if I had not refied at 20% to move to a conventional loan then I would not be able to apply a FHA loan anywhere else yet.

Thanks @Sara Frank. Very good advice. Have been trying to take all the BP and book knowledge and tailor it to the realities of this market. Some people love to talk about the 4-3-2-1 strategy for example, which is impossible in DMV. Sounds like shooting for SFH with ADU on a conventional money down product might be a good option for the first property at least.

@Chris Davidson @Lawrence Potts If I do end up identifying a small multifamily, it sounds like FHA still route to go? Would it make sense to put down something higher but still under an FHA to speed up the timeline to refi out? Especially in this rate environment?

If I put down 10%, I'd obviously have a faster timeline to get to the 20% for refi. Maybe less cash return in short-term but seemingly would help us increase portfolio scale faster. 

Wow. So many great answers!

@Lawrence Potts, being able to go 3-5% conventional on SFR with ADU is news to me. I guess I was falsely under the impression that basically anything under 20% requires an FHA loan (not counting VA, USDA, etc.). Is this in general or only for first time home buyer programs and the like? My income is too high for DC's program, but I'm interested in this option if it is available regardless of income. What kind of strings would getting 5% down on a primary SF convention loan come with? @Dave Skow mentioned it would likely have higher pricing than the FHA loan? Owner occupancy requirements I assume at least? 

So @Chris Davidson, it sounds like based on what you're saying, instead of doing the 3.5% FHA loan and wait until 20% before refi and doing all over again strategy, I could just do 5% down on SFH and roll into the next one without the need to get up to 20%. I'd still have to wait a period of time for an owner occupancy requirement though I assume. One year same as FHA?

Especially with DC's market, this is all making me think English basement style (ADU) may be a better target than multifamily...

@Dan H. That's a cool example of a not well known value add opportunity. I'll definitely be on the look out for those kinds of things in the DMV market. 

@Lawrence Potts. What a great response!

Yeah, to your point, the goal is to be cashflowing after we move out. So right now my big focus is on how to minimize the amount of time that we are living in one of the units before moving out and renting out all the units. Obviously there is the baseline of needing to live there for a year for owner-occupy requirements. So it's just a question of how close to that year we can get as our bottom line. 

I did not know there was an option to do 3-5% outside of FHA. So good to know on the potential 3-5% conventional loan for an ADU. I've looked into home buyer programs, but it looks like I make too much to qualify for any of those. So have basically just ruled those out. But yeah, ADU seems to be a more plentiful option in the DMV area, so definitely considering that route.

Thanks @Jaron Walling. It's interesting that so much House Hacking literature celebrates FHA loans as a means to generate cash flow and reach financial independence. It sounds like from this chat and from my looking at the actual market and running numbers, that perhaps that's a myth or relic of a different time or only works in very small specific markets?

@Theresa Harris, @Lawrence Potts, and @Dan H.,

So would you say this basically all leaves me with a choice of putting down more and delaying cash flow more til a bit down the road if not doing rehab or putting down the 3.5% and shooting for forced appreciation to get to the positive cash flow sooner while getting to that 20%. Are those basically the only choices here? 

@Lawrence Potts How would going the ADU route differ in terms of the finances? Wouldn't it be the same? Or are you saying go the ADU route in terms of finding forced appreciation for SFU by creating an ADU where zoning/permitting would allow one to do so?

@Dan H. So it sounds like based on what you are saying that if we wanted to pull off the strategy I mentioned above within a year or two for that first property, it might only be possible through forced appreciation, right?