Let me start off by saying I have never purchased a home before, I have always been a renter. I would like to purchase a single family home, rent it out, and hopefully do some more. I have minimal funds for a down payment. I want to do this the right way and make sure I will be able to make more investments in the future (don’t want to tap out financing on my first purchase). I am very unclear what route to take, any and all help would be appreciated. Thanks.
Hi,
Having minimal funds and not currently being a home owner makes me want to guide you to buying your first home, something reasonable and modest (3 or 4 bedroom / 2 bath, 2 car garage) which would be affordable for you!
You can buy owner occupied for 3.5% down and closing cost’s and as long as you occupy it for 2 years, you can then make it a rental and go buy yourself another owner occupied home!
You could rent out a room or two for the 2 years enabling you to save more and expand your saved dollars, I have friends who have acquired 10 or 12 homes over 25 or 30 years who would probable not classify themselves as investors but have simple bought a new owner occupied home every 2 or 3 years and made the ones they moved out of rentals!
Talk with a real estate agent on your team and find out what seller contributions are being allowed by FHA, VA or Conventional lenders in your area? VA is 4% max, FHA is 6% and Conventional has been allowing a sliding scale based on loan to value! (90%=3%, 80%=6% and 75%=9% total contribution)
(Towards down payment, closing cost’s and loan cost’s and minor home repairs)
With seller contributions, your cash, your good credit, stable job history and 2 years tax returns you can do this!
GR
Most investment type home loans require 20% down now, since the lending standards have tightened up alot. Since this is truly you first home purchase, I would recommend buying yourself a Fannie Mae foreclosure (see www.homepath.com) or HUD foreclosure (see www.hudhomestore.com) and buy yourself a property as “owner occupied”, and you might just have to put 3% or so down on the property. Live in the property for a month or two minimum, to get it fixed up if needed and also to make sure you are not breaking any laws (an owner occupied property should be owner occupied for a least a little while), then turn around and find a new place for yourself and lease out the house. That way you can put just a little down and still get yourself a nice place. And if you choose to keep the place … well that would work out well for yourself too, but either way only do that “owner occupied” trick once. From then on you’d need to buy homes from them as an investor, which means you would need to put a little more down. Good luck!
Also, if you go the conventional financing route, you might consider buying yourself a condo or townhome in a decent part of town. Those can be picked up crazy cheap - depending on where you live. Personally I wish I would of picked up a $20-30k condo in north Dallas back when I was 18-20, and paid it off in a few years, and then bought another or two. That actually would of been easy, and would of given me a nice down payment or equity to extract for investing in single family homes or bigger things later in life (I’m in my early 30s now).
Bad advice. This is mortgage fraud. If the loan is federally insured, then the crime is automatically a felony. The gated community in your future could just be a federal prison.
so your telling me buy a hud home you did not mention close in 30 days can that be possible assign the contract to another buyer with a hud home, if thats the case i will do that
So you’re concerned about running out of money to buy future rental properties? I suggest you first generate a some cash reserves which you can later use as down payments on rental properties. There are a bunch of ways you can use very little money or no money to acquire a property and then sell the property to generate cash. For example you could wholesale a few properties and bank the profits from each deal. You could use the money you have, buy a property, improve it, sell it and bank the profits.
Look for strategies that will generate cash in a reasonably quick manner. Then when you’ve got enough cash reserves built up, start buying rentals with some of the money.
There are a lot of ways to accomplish what you want to, but getting a rental first is going to severely limit your cash on hand for acquiring more rentals in the near future.
I agree with the member Gold River as far as tactics.
However you can start purchasing other real estate after your own house with no money of your own, by lease options or owner financing. There are several opportunities out there right now for doing so, since it is a buyers’ market and several sellers need to move their properties.
I actually ran that question by 2 successful real estate lawyers I know, one whom is also a real estate investor, and it is perfectly legal. However it is prudent to “owner occupy” it for at least 30 days and to only do it once.
Time to get new attornies.
FHA financing requires the borrower to sign a certificate of intent to occupy the property as a primary residence at least 12 months after settlement.
Signing this certification knowing that you have no intent to occupy as a primary residence is falsifying your loan application. In short, mortgage fraud. If it weren’t fraud, then why does the attorney tell you not to do it more than once?
Still bad advice, even coming from your attorney.
My guess is the atty is hanging his hat on what “intent” really means. Situations change and there could always be something that comes up that would cause you to have to move prior to 12 months, but doing it more than once shows a trend.
Standup, look for homeowners who are motivated to the extent that they will consider a lease option. That means low down payment for you, possible rent credits while you lease, and locking in a price for a long term. In my opinion, that is your safest and most likely course of action.
Good luck.
That is not the context of the discussion. The premise going in is that the buyer knows his intent is to use the property as an investment and not as a primary residence. CEO says you can cheat the system by moving in for a month, then doing what you intended to do all along.
His attorney advisors know the risk of being caught is fairly low if you don’t do it again. Ifn effect, they are saying it is OK if you don’t get caught. This scheme starts with falsifying the loan application in the first place. Still fraud, even if you don’t get caught.
That is exactly the context of this discussion. You just cannot admit you are wrong whatsoever. So lets move on to the next subject. =)
hello,im new in this forum.