All Forum Posts by: Joe Ferguson

@Jonathan Vandal Welcome to BP! That is crazy and at least I'm not alone. I am a first time home buyer and they were offering me 3 and 5 percent conventionals on single family. When I mentioned that it was 2 units it jumped to 15% which I still don't understand because these produce income while you live in them and SFRs do not. Anyway, I am not sure if that is specific to first time buyers. Check your inbox!

@Jon Holdman I agree. Really my main goal with the FHA and the first property is to live for free. In doing that I like to think I am cash flowing the $700 in rent that I am paying now. I have been analyzing as if I'm renting both units (after I move out) trying to cash flow 100 per door. Not happening. I guess if the FHA breaks even I should cash flow after refi to conventional later on.

@Jon Holdman I will be self managing the first couple deals but I 100% intend to turn everything over to property management in the future. Yes, I will cash flow now but if I don't factor that 10% in at purchase cash flow will be erased instead of just reduced. Also, I am not specific to Duplex with FHA. With 3.5% down this gives over $300K buying power which I will not likely have again for a long time. This makes me inclined to buy a quad while I can afford it but the numbers seem to get worse as the price goes up. Thanks for the reply.

@Joe Arida Good tip! If I increased my down payment to 10% from 3.5% I'm sure alot more of these deals would make sense. I am kind of in a weird spot at %15K. Just shy of conventional requirements but couldn't cover closing anyway. FHA will do that plus leave me with reserves. Thanks for the advice.

I am having an extremely hard time finding a single deal that will work with the 50% rule using an FHA loan. In almost every case the cash flow is negative with a few around break even. This is using list price and existing rents being paid by tenants.

Even with assumptions (not a fan) of buying at a lower price and raising rents by $100 or $150 to market, the 50% rule still yields break even or very minimal cash flow. Basically the extra $200 or so per month that you pay with FHA over conventional is eating the cash flow. At 42% expenses which may be more accurate for a duplex, some deals start to make sense but are still short of the desired $100 per door. Overall, I feel like I am fudging numbers at that point to make it work. I would have no problem achieving this on many deals I have looked at with conventional.

Is this just the price you pay when using an FHA? Tips or Advice? It's obviously possible but it looks like it would have to be a screaming off market deal.

I have $15K and saving $1,500 a month. I can get a 15% conventional on a duplex. Should I just wait and go that route?

@Sunita Maharaj Thanks. I would guess that your deals are cash or hard money. I am finding this on every property where the numbers look good and in my budget. I get it as there is nothing fast about an FHA loan but it makes it hard.

@Matt Motil Thank you.

@Richard Leyba tejada Thanks. I feel like I have taken enough time. Even though I am wary (terrified actually), without rushing into a bad deal of course I want to get one under my belt ASAP. Then, I will have plenty of time to continue learning and networking while I am saving and planning for the next deal. 

@Damien L My thought's exactly. If I try to get it perfect the first time I will never pull the trigger. Like you said, the first experience itself will teach you a tremendous amount. Best of luck!

Congrats on you first deal! I can't wait to get my first deal done. I know a lot of fear and anxiety will go away after that first deal is made and buying the second will be twice as easy. As mentioned, then the snowball begins to form. 

It is all personal preference of course but I would rent a house all day over an apartment if you can find one within budget. The main reason for me is privacy. I have literally had neighbors above, below and on each side of me in an apartment and I could hear everything. Really annoying. Also, some places have ridiculous rules. 

There are pros and cons to each. Everything is handled with apartments. You may have to mow your own grass or do small repairs with a house depending on your landlord. 

The fact that this is needed ASAP will likely result in an apartment. They are very easy to find in comparison to a house.

Thanks for you input @Ray Johnson and @Chris Mason

I didn't think it was an issue. I guess I was mainly worried about the typical 6 months to a year they require but yes everything is nearly identical just switching companies. 

A new job opportunity was presented to me recently from a great company I have had my eye on for awhile. I just interviewed today and got the job :) At the same time I am ready to buy my first deal. 

I have been at current job for awhile, good salary, credit, debt-to-income, etc., and would easily qualify for a loan. I have been told by a friend that if it isn't a career change (it's not) and roughly the same pay (it is, hopefully more) the affects would be very minimal. Is this true?

The loan will be FHA or 203K. Not worried about being approved as much as getting worse rates/terms for my first deal.

This is fantastic! Congrats on your success. This pretty much sums up my goal in life. Working for others isn't the problem, it's "having" to work for others that has upset me my whole life. They control your money so in a way they control you. Time to get some f*** you money.