Hello everyone!
Just a quick introduction... My name is Louis Grigoletti and I am a new member of the BiggerPockets community. I am currently reading The Book on Rental Property Investing and I feel very excited about the prospects of real estate investing. I currently attend Central Michigan University in Mount Pleasant, Michigan, but I am originally from Brookfield, Illinois. I will be moving to Detroit, Michigan this summer to start work in a controllership role at a large US automaker and I plan on making my first real estate investing move as I relocate to Detroit.
I am looking to purchase a duplex/triplex/fourplex within Wayne County outside of Detroit's "warzones" and house-hack my first property. I would like to get this deal figured out in such a way where I can move in and start work in mid-June, while either finding tenants within the first few months or finding a unit that currently has tenants. I have just recently begun seriously attacking this goal, and I have a few hesitations that I was hoping to receive some tips/guidance on from the community.
Hurdle #1 - Credit Score: I recently got engaged (like last week) to my now-fiance and before financing the ring my credit score was well above 700 (720-750). Now after financing the ring in a not-so-credit-friendly way, my score dropped to about 640. I am using savings reserves from a prior internship to pay off the ring over time, but also aggressively with extra earnings to improve my score. I am aware that this score isn't a deal-breaker, but as a newbie I am slightly concerned with going into a mortgage with this lower score and not a ton of time to increase it dramatically.
Hurdle #2 - Down Payment: I would be looking to use an FHA 3.5% down payment on the property with a budget of under 100k. I currently have about about 1100 of the potential 3500 available, but due to still being a college student, having the ring payments, and some credit card debt (trying to pay off to increase credit score), I am unsure of how much I will be able save for a cash down payment within 4-5 months while working slightly above minimum wage with a small side-hustle. I realize there would be added closing costs, fees, potential slight rehab, etc when closing the deal as well. I know I could seek other loan sources for the down payment as well, but I would have a quick pay-off strategy for those loans. See Bright-side...
Bright-side: The role I will be moving into in June pays very well right out of college (70k) and has a signing bonus (10k) - both gross amounts. I also have about 8k in government bonds which could serve as a down-payment, but they would be taxed unless they are used for higher-education costs (which I feel would be a better way to go with them because they need to be paid no matter what so why have them taxed).
So the real issue I am having is: Should I seek out personal loans/hard money lenders at closing, etc and then quickly pay off the balances once the signing bonus comes in to get started house-hacking right away? Or would it be better to find a place to rent initially for a short period of time and then take more time to find a place/learn the area/close a deal and have cash-in-hand for the down payment with a possible added credit-score boost from paying the ring and credit card debt off fairly quickly?
I feel very motivated to get started right away with house-hacking and not have to rent for a short period of time which involves moving in/out/logistical challenges with renting for only a couple months and the opportunity cost of using that monthly rent towards real-estate investing, plus the loss of rental payments from tenants.
I think that giving good background on my situation could help with more specified advice. I greatly appreciate those of you who read this fairly-lengthy post and are willing to share some advice as to what may be a good way to go about a beginner's initial purchase.
I hope to connect with many of you on an on-going basis, especially investors in the Detroit, Ann Arbor, Lansing, Grand Rapids, Mount Pleasant, and Kalamazoo areas. Thank you again! I am glad to be here.
