Hi everyone. First, I’d like to thank those sages who contribute to this forum. Your input really helps us rookies gain some confidence with our investing.
I wouldn’t call myself an active investor, in fact, I made a rookie mistake in late 2007 and bought a property in the wrong neighborhood and at the wrong price. Of course I thought the market would keep climbing and blindly ignored the basics.
Now I’m a much more passive investor. I’m purchasing a home I feel comfortable living in for 4-5 years, then I plan to rent it and move on, repeat. The mortgage will cover $200+ profit/month rent when I decide to move on. It’s in a nice neighborhood that attracts good renters. I have enough reserves to cover unexpected issues. Even though this is a passive approach, I feel comfortable with this style for me. Regardless, I still want to make some good purchasing decisions.
I know, a simple strategy but if I can purchase 3 properties in 15 years and maintain them I should be comfortable in retirement.
Here are my questions for the sages:
Will I even be able to purchase another home using bank financing if I own another and have renters?
Is it possible to purchase a house with no money down given today’s environment? I’ve heard many banks want 20% down, yikes.
With rates and housing prices so low, I feel this is an environment we may not see in a long, long time. That being said I’m not sure what else to invest in and still be a passive investor. Maybe one house is the only option?
So that’s it! Any input or questions are certainly appreciated.
None of your questions is answerable in advance of you trying.
You can finesse yourself into owner-occupied, “no down” government-backed loans (VA and FHA) if you get enough credit for repairs, decorating allowances, or whatever works right now.
That said 4-plexes can qualify for owner-occupied financing (Not VA, I don’t think). Whether you have to put money down depends on how much the seller will carry back (or what you put up as collateral against other property as a down payment), or what kind of government-backed “owner-occupied” loan you attempt to get, etc.
In the meantime, you should find a good mortgage broker and ask him these questions. He’ll give you much quicker, more sophisticated advice and feedback thanyou’ll get here. Just saying.
PM me and I’ll send you Robert Allen’s “favorite no down payment formulas” I stole. Meantime don’t think up roadblocks out of thin air by listening to Negative Ned’s. That’s gonna slow you down a lot. Look for open doors, not at closed ones.
It appears that your strategy is to buy a “new to you” primary resience every five years or so, then turn that property into a rental when you buy your next primary residence.
Yes, you can definitely get bank financing for a primary residence even if you own financed rental property.
The downpayment for your second property does not have to be a burden either. A VA loan only requires a 3% funding fee plus closing costs. FHA loans require 3.5% downpayment plus closing costs.
You can only have one VA loan at a time and only one FHA loan at a time. Refinance your FHA or VA loan with a conforming Fannie/Freddie loan, you can get another FHA or VA loan for your primary residence.
Your strategy is certainly workable on your timeline. Once you have your rental portfolio, and a substantial reserve fund, plow excess cash flow back into the mortages to get your properties free and clear for extra retirement income.