All Forum Posts by: Jackson Shumaker

Hi Scott, you don't need to be a first time homebuyer to use an FHA loan and you don't need to be low credit (as many would suppose), but the product probably appeals most to low-credit first time buyers. Typically you can only have one FHA loan under your name at any given time, but there isn't a limit on Conv so long as you qualify. There are a few special circumstances where you could have more than one FHA, but not usually

So you can buy FHA and then later buy a 2nd property Conventional or vice versa - but your 3rd and subsequent properties could not be FHA so long as you're holding a previous one. However, you can also refinance an FHA loan into a Conv. So buying FHA, refinance into Conv, and then buying FHA again is technically doable. Remember also, that FHA is generally intended for an owner-occupant/primary-residence for at least the first 12 months, but as was discussed above this can be worked around.

If a client qualifies for Conventional I almost always advise them to use that product rather than FHA as a general rule - but a lender will have the more relevant, tailored advice.

Hi Zachary, congrats on the success you've had so far! Here are a few initial thoughts and observations for both scenarios which might be useful in guiding your next move:

Scenario 1: Leave your Current Primary Residence & Buy Another House to Hack Locally
1. For the vast majority of Conventional, FHA, and VA mortgages you are only guaranteeing the lender that you'll live in the property as your primary residence for a minimum of 12 months. After this point you can typically move elsewhere and put your old primary residence to work as a dedicated rental property. Your interest rate, on a fixed rate loan, should remain unchanged and your mortgage should not be called due.

However you should still confirm that this is the case with your lender (and read your mortgage commitment) out of an abundance of caution and because some loans and programs do require a longer seasoning period. Some first-time home-buyer programs and grants require up to 5 years of primary residency unless you opt to sell sooner.

2. By keeping your investments local you may be able to self-manage your properties more easily because you're close-by and already knowledgeable about what's required of you as a landlord. You will be obligated to modify your home insurance once you leave, regardless of whether you self-manage or not and this would apply to Scenario 2 as well - for any property you don't occupy yourself.

3. You can probably spend much less time touring and learning new things than you would in an otherwise unfamiliar market: laws, neighborhoods, tax considerations, etc.

Scenario 2: Stay in Place & Buy an Out-of-State Multi-Family Property

1. Clearly an opportunity to invest in a more landlord friendly state than NY. This is a significant potential benefit that can impact everything from security deposits to rent controls to eviction procedures. 

But please thoroughly educate yourself on what "landlord friendly" actually means on a case by case basis. I don't know which nearby state you're considering (PA is probably the most attractive) but local municipalities will sometimes enforce extra red tape and/or protections for tenants beyond the state-norm. What exactly are you getting and what are you potentially losing out on? Can some of your concerns be mitigated (locally) through things like strong tenant vetting and property class selection?

2. Expect to put 20% down or more. I've seen some lenders offer as low as 15% down on an investment property but the terms they'll impose for doing so aren't usually worth it imo. For owner-occupied you could do as low as 3%. I didn't want to list this under Scenario 1 as it's redundant and whether or not having more control over your down payment is a pro/con is pretty case-specific.

3. ???
Depends on which state you're considering.

This is just off the top of my head and far from an exhaustive list of considerations. I would need to know a lot more about your specific situation and objectives in order to tailor the advice.