All Forum Posts by: Peter Giokas

Hey everyone, I am looking to buy this 3-unit property. I plan on using an FHA loan and living in the cheapest unit. The property is listed for $625,000 and I have provided the rent roll & property tax.

Unit 1: 2Bd 1 Br: $1825
Unit 2: 1Bd 1BR: $1475
Unit 3: 1Bd 1Br: I will Occupy
Property Taxes: $8,000

I have about $75k sitting in the bank. I plan on putting about $40-50k (6-8%) as a down payment. I will need to pay about $300-$400 out of pocket every month. Should I put roughly $25-32k (4-5%) as a down payment and pay 400-550$ out of my pocket every month? 

After 1 year, I do plan on moving out and renting all 3 units to cash flow. Should I be putting less of a monthly payment? Or should I be putting more and rush into refinancing into a conventional loan? (to get rid on mortgage insurance)? 

What are some other things I should keep in mind or take into consideration? Is this a good deal?  

I am 22 years old, and I have been working in the finance industry since I graduated from college(18 months ago) 

Originally, I was looking to house hack a 3 family home. With the real estate market being very hot, I noticed that the FHA loan is putting me at a huge disadvantage when competing with buyers that are using conventional loans / or all-cash offers. Most sellers do not want to deal with FHA loans, especially when there are multiple offers on every house....

It feels like I have a very slim chance of finding something in this market with an FHA loan. However, In 3-6 months I should have enough money saved to be able to put a 20% downpayment on an investment property (2-4 units), and I can continue living at home.  

Is it worth waiting for the market to cool down, and try to take advantage of the FHA loan?

OR jump into the Real Estate market with a conventional loan, meaning I would need a larger down payment, and have a smaller ROI.

I am looking to purchase a 3 unit rental property using an FHA loan.

The price of the house is $600,000. I plan on putting about 10% down. I will be only collecting rent from 2 units throughout the first year as I live in one of the units. With 2 units rented, the rental income only covers about 75% of my entire mortgage (incl. insurances & taxes). I will need to pay about $500 a month from my pocket. I do plan on renting the third unit after I move out in a year. In this case, the property will cash flow(roughly $700-800 in positive cash flow). I do plan on refinancing as quickly as possible to get rid of the PMI so I can increase my cash flow. I plan on either making small renovations or paying a decent amount towards the loan in 1-2 years to meet that 20% equity threshold.

Should I be focused on finding a property that cash flows with 2 out of the 3 units rented? This is extremely hard to find. Please let me know any thoughts or suggestions about my plan. As a 1st time investor, I am open to any and all advice. 

Thanks  

@Evan Polaski

Thanks for all the advice!! Also having 4 duplexes opposed to a 8 unit building jmay be worse because I’ll probably be spending more on property tax, I’ll have to worry about 4 roofs. However, it will prob cost more per unit.

However on the positive side, I’ll be able to gain appreciation on 4 properties opposed to one.

Also is it better to go in individually on a deal.. Or have a partner which will give me more capital and look for a bigger property

I’m planning to buy my first investment property in New Jersey. I’m not sure how big to start. Should I go for a two unit property? Or save a little longer for a 4-8 unit property? How much should I have on the side after purchasing?