All Forum Posts by: Graham Nadler

Blown away by everyone's responses.  Thank you all for the insight!!

@John Underwood awesome insight.  Would you consider flooring as most prominent thing to tenant proof first? 

Hey everyone.  I have heard on the shows and from investors that when they make improvements to a property they "tenant proof" them.  An example of this I have heard on the podcasts is vinyl flooring that is durable and relatively cheap.

I was wondering what other examples of "tenant proofing" properties you guys do that has proven effective to save money and or time.

Thoughts are much appreciated!

Hi Nick, 

Generally speaking you can assume investment transaction interest rates will be a point higher than owner occupied interest rates. Sometimes more, sometimes less with a lot of factors going into this determination (credit score, income, address of property etc.). However 1% higher for investment properties (residential) is a good rule of thumb in differences between owner occupied and investment rates. In terms of down payment depending on the type of property you would be looking at as little as 3-3.5% for a single family owner occupied. I am sure you have read if you obtain an FHA mortgage your minimum down payment on 1-4 units owner occupied remains at 3.5%, however with conventional more than one unit you would be looking at anywhere from 5-20% down (depending on programs in your area). Investment transactions require 20-25% down payment. Fees should be generally the same across the board with residential transactions (residential 1-4 units). Hope this was helpful!

@Dominic Balconi yes this post is only on owner occupied "house hacks".  

@Dominic Balconi I work with investors/house hackers who buy more rent ready properties, I guess it depends on the client needs. 203K can be a great way to do a renovation for owner occupants. In Ohio there is a program called HomePossible by Freddie Mac that allows for 5% down on a duplex if you qualify. We did one the other day! Other than that you are right about increased down payment amounts for more than 3-4 units if you don't go FHA.

I see a lot of discussion on utilizing FHA mortgage loans for a first "house hack" owner occupied property (1-4 units).

There are certainly benefits of an FHA mortgage. They can be more relaxed on negative credit circumstances, mortgage insurance can be cheaper when compared with conventional products, your interest rate can sometimes be better, and there is the fabled 3.5% minimum down payment.

However there are certainly sides of FHA that aren't always quite as favorable to the borrower. I find that people don't always know about these details of an FHA loan. FHA Mortgage insurance cannot be cancelled once you reach 20% equity in your property like it is with conventional private mortgage insurance (PMI). That means you have mortgage insurance for the life of the loan (often 30 years of an extra cost with your monthly payment) unless you sell or refinance. The appraisals are harder to pass without additional repairs (E.g. can't have peeling paint) when compared to conventional. There is also an additional 1.75 points (1.75% of the purchase price) financed into the loan that is an extra cost for a mortgage insurance premium. So they are generally more expensive than conventional products.

I am not saying I don't think FHA loans can be good. They can be a good fit depending on someone's situation. It can be an awesome way of getting into a 1-4 unit property with very little down. What I am saying is when shopping for a loan for an owner occupied property there are often other options available to you besides FHA. Options that could potentially be better depending on your situation and goals. I would encourage you to talk with a couple different lenders in your area to see what is available to you wherever your market is. In my local market there are numerous 3% down conventional products for single family, 5% down conventional products for duplex, down payment assistance on more than 1 unit properties, tax credits, all kinds of programs that have other ways to benefit owner occupant buyers. Your low down payment options do dwindle once you go over 2 units with conventional products. My point is that wherever your market is, there are probably loan products that you may not have know existed as many can be tailored to the area you live in. Do your due diligence when picking a mortgage loan that is best for you as you have many more options available to you as an owner occupant shopper.

Let me know your thoughts!

Thank you for your response Robert.  I have looked into southern orchards but have since been looking into more B class neighborhoods but you are right thinner spreads with less money down.

Hey all,

I live and work as a lender in Columbus, OH.  I am working towards buying my first rental property (most likely a small multi family with owner occupied financing).  Columbus as a market seems to be getting hotter and hotter and the more the heat gets turned up, the less likely a lot of properties within reach of my situation seems it can cash flow (relatively low money down, even with all my lender tricks up my sleeve I can apply to my own situation).  Any advice from people in Columbus?

Welcome any input or advice!

Graham