Alright fellas, I am going to drop some real estate info for those of you looking to make some moves in Real Estate investments.
Premise: Using first time home buyers programs to establish a real estate portfolio without using too much of your own capital, while taking advantage of favorable interest rates/terms.
Limitations: This applies to the USA only. Is a one time deal that can jump start your investment portfolio.
Legality: This information is solely for entertainment purposes only. This does not constitute advice, legal or otherwise.
Capital Required: USD $10-20K (depending on Locality).
Credit: Fair to Excellent.
Strategy: In order for you to execute this strategy, timing is of the essence. The goal of this strategy is to buy and hold multi-family cash flow producing properties that will start providing you with income from the first day. I recommend that you look at 3-4 unit (triplex or quads) properties for investment. You should be looking at several bordering states for these types of properties (more on that later).
Basically, there are numerous first time home buyer programs (HUD, Fannie Mae/Freddie Mac, State level) that allow buyers to purchase real estate (1-4 units) with minimal down payments (as low as 3%), many with no closing costs (they are rolled into the loan). Most importantly, the interest rates are lower and the underwriting standards (weaker credit, smaller assets/saving requirements) are looser.
You should start looking for not 1 but 2-3 multi family properties (preferably in adjoining states). Make sure that you have obtained preapprovals from 2-3 different lenders/programs. Instead of making an offer on 1 property and being happy that it was accepted, you will be making offers to get 2-3 multi family properties. Timing here is critical: You will need to have the Purchase and Sales agreements staggered in such a way that all two (or three) closings are within a 30 day period. You will want this to be the case because 1. Mortgages don't show up on the credit reports until 30 days after, 2. You will need to prove a first time homebuyers status at each closing.
I recommend different states because you don't want be putting in 2 loans in the same state that can be tracked back in their computer system. Also try to mix between federal and state programs. Once you have closed on the properties, the lender will not be checking your credit reports.
Advantages: instead of starting out with 1 3-4 unit deal, you will have a nice portfolio of 9-12 units from jump, having more units = less risk (if you have purchased them correctly) , your $10-20K down payment goes farther.
Disadvantages: You could end up with more unit (= tenant headaches) than you bargained for. You could be caught on your second or third closing, which would entail you losing the deal. Stress of staggering the closings within 30 days (shit happens, inspections delay things, issues pop up).
Risks: Basically you'll need brass balls on making these deals happen and be prepared to be busted. If you do get caught, it'll be before you sign the papers at closing, which means that you're subsequent deals will fall through but you won't be in trouble with the law because you had not signed anything except for the preapprovals. Even with a pre-approval, you could justify it by saying that "I WAS a first time home buyer at that time."
I am happy to answer any questions/concerns.
Premise: Using first time home buyers programs to establish a real estate portfolio without using too much of your own capital, while taking advantage of favorable interest rates/terms.
Limitations: This applies to the USA only. Is a one time deal that can jump start your investment portfolio.
Legality: This information is solely for entertainment purposes only. This does not constitute advice, legal or otherwise.
Capital Required: USD $10-20K (depending on Locality).
Credit: Fair to Excellent.
Strategy: In order for you to execute this strategy, timing is of the essence. The goal of this strategy is to buy and hold multi-family cash flow producing properties that will start providing you with income from the first day. I recommend that you look at 3-4 unit (triplex or quads) properties for investment. You should be looking at several bordering states for these types of properties (more on that later).
Basically, there are numerous first time home buyer programs (HUD, Fannie Mae/Freddie Mac, State level) that allow buyers to purchase real estate (1-4 units) with minimal down payments (as low as 3%), many with no closing costs (they are rolled into the loan). Most importantly, the interest rates are lower and the underwriting standards (weaker credit, smaller assets/saving requirements) are looser.
You should start looking for not 1 but 2-3 multi family properties (preferably in adjoining states). Make sure that you have obtained preapprovals from 2-3 different lenders/programs. Instead of making an offer on 1 property and being happy that it was accepted, you will be making offers to get 2-3 multi family properties. Timing here is critical: You will need to have the Purchase and Sales agreements staggered in such a way that all two (or three) closings are within a 30 day period. You will want this to be the case because 1. Mortgages don't show up on the credit reports until 30 days after, 2. You will need to prove a first time homebuyers status at each closing.
I recommend different states because you don't want be putting in 2 loans in the same state that can be tracked back in their computer system. Also try to mix between federal and state programs. Once you have closed on the properties, the lender will not be checking your credit reports.
Advantages: instead of starting out with 1 3-4 unit deal, you will have a nice portfolio of 9-12 units from jump, having more units = less risk (if you have purchased them correctly) , your $10-20K down payment goes farther.
Disadvantages: You could end up with more unit (= tenant headaches) than you bargained for. You could be caught on your second or third closing, which would entail you losing the deal. Stress of staggering the closings within 30 days (shit happens, inspections delay things, issues pop up).
Risks: Basically you'll need brass balls on making these deals happen and be prepared to be busted. If you do get caught, it'll be before you sign the papers at closing, which means that you're subsequent deals will fall through but you won't be in trouble with the law because you had not signed anything except for the preapprovals. Even with a pre-approval, you could justify it by saying that "I WAS a first time home buyer at that time."
I am happy to answer any questions/concerns.