Hello Travis,
First of all! I want to give you some "congrats" on your job and the good luck you have had.
Plus, you are being very wise on two fronts:
1. Considering investing in real estate, and reaching out for advise from others, like a real estate forum, like bigger pockets.
2. 20 years old and saving money! Travis that's an oxymoron, lol! A 20 year old guy with youth, testosterone, hormones, "pent-up energy", its just so hard to save. The fact that you want to save, and you are in a position to "salt-away" some meaningful dollars, is really cool! Thumbs-up Travis.
Now what real estate to invest in?
Well, how "sub prime" is your credit? If your credit score is 600 or higher, you may qualify for a FHA loan (stands for Federal Housing Administration). FHA is a division of HUD (stands for The U.S. Department of Housing and Urban Development).
FHA offers a handful of different loans which you may qualify for. And you can buy a "duplex" or a "triplex" or even a "quad", with FHA money.
One FHA loan is called a 203K rehab loan. You find, let's say a duplex, that is in "horrible shape"! ...Needs a roof, needs an "interior makeover", needs an energy efficient air and heating systems, and even a "landscape makeover".
And you can pick-up this duplex "for a song" (I mean cheap! cheap! cheap!). And why is this? Well because most lenders will not touch this property with a "ten foot pole". It just needs too much done, and most banks and mortgage companies "underwriting guidelines" say they want to loan on properties in better condition.
Now an FHA 203K rehab loan WILL loan on this duplex in horrible condition. And do it with as little as 3.5% down!
A 203K loan will pay to fix most everything I mentioned and more! Appliances, flooring, carpeting, fix a pool, and much more!
And you can wind-up with a "like-new", energy efficient duplex (triplex or "quad", as FHA will lend on up to a 4-plex).
First time home buyers. Travis,try to locate a neighborhood Federal Savings Bank that has "Federal Funds" to assist first-time home buyers with matching down payment funds. Right now certain savings banks have government money and will match up "4 to 1" your down payment.
Pretty exciting! Also some small savings banks are "portfolio lenders", which means they do not sell all their mortgage loans on Wall Street. In other words they keep all or part of the loans "in their own portfolio" (they may or may not service their "portfolio of loans".) Being a portfolio lender means they can "bend or stretch" their loan underwriting a little, and "go outside of the box".
Travis, an FHA loan can also be a more traditional loan, to help you buy a duplex that is in good condition, that does not need repairs.
But if you qualify for an FHA loan, you can take advantage of a low down payment (3.5% or lower, with "matching first time home=buyers' federal dollars"!).
Travis, HUD also administers other programs like the NSP (Neighborhood Stabilization Program) and HOME (Home Investment Program). You will need to check with the County where you are looking to buy and see if these programs are available.
These are great programs, and many Counties are "under the gun" to use HUD money by a certain date. Most Counties use much of the FHA guidelines to qualify you (i.e., a 600 credit score, your 'debt-to-income', etc.). These programs can really be great! They will not only loan you money to buy a house (1-4 units qualify!) they will give you a grant to pay for rehab, and will forgive the rehab loan 100%, after so many years!
In 2008, The Housing and Economic Recovery Act created the NSP and appropriated many billions of dollars for you, Travis! (Well not just for you! lol!)
Also, around 1990 The HOME Program was created to promote home ownership and "affordable housing opportunities" to low or moderate income (or maybe newbies like you Travis just may qualify?).
The good thing about FHA loans is they can be assumable loans, when you sell. (NSP or HOME loans are NOT assumable).
Another possibility Travis are foreclosed VA properties (Veteran's Administration guaranteed a loan and the loan was defaulted by the borrower, and the VA now owns the REO property!).
The VA will make what they call a "Vendee Loan".
If you buy a foreclosed VA property, you do not have to be a veteran to qualify. Loan qualifying is pretty easy, and investors can buy a VA property with a VA "Vendee" loan.
Travis, you can go online to a VA Website and see thousands of VA properties across the USA! It's unreal!
Before you get started, try finding a local savings bank that does FHA loans, make sure they not only do FHA loans, but do FHA 203K rehab loans. And MAKE SURE the savings bank has government dollars for "matching down payment money" (like the 4 to 1 matching funds I mentioned earlier!).
Tell the loan officer a the savings bank what you are trying to do (i.e., "buying a duplex, etc.").
Travis, get yourself pre-qualified"! If you do not qualify, make sure you ask why? And correct the problem(s). Sometimes it just takes time to correct a credit problem!
Travis, I have only scratched the surface on ways for you to obtain financing.
Just take your time and continue to SAVE your cash.
Travis, cash rules! Over the next fifty years, so continue to be a saver! And you will thank me for this in the decades to come!
Good luck!
Bob
