Thread: Getting Started

I think you better keep saving. Even if you were going to buy it to live in, I would think you would need at least 10% down to cover everything. Closing costs etc. This would limit you to a 45k house.

If you can find one in your area for that amount and wanted to use it as an investment you would be looking at more like 20% down. The 4500 you have now is about what you would need for a reserve fund per property. I will not buy a property unless I have 3k in the bank for reserves for that property. It only takes 3 months of vacancy, or 1 bad renter to go through that.

You may want to look at doing an owner occupied rental as your starting point. The financing and incentives are amazing right now for first time home buyers. If you purchased a duplex you could rent out the other half. FHA finances up to 4 units and only requires about 3.5% down. You should do your own research if interested and run some #'s in your area, but here are some incentives I have come across:

- $8k first time home buyer tax credit (you need to live in the home for three years or you have to pay it back)
- $100 Down payment for some HUD homes (check their website for homes)
- 3.5% coupon towards closing costs for first time buyers on Freddie Mac through their SmartBuy program by Homesteps(check their website for homes)

Good luck to you!

rcardin, thank you for the advice. I realize what you're saying about keeping reserve funds but I know I could borrow money from some close people of mine if I ran into a tight spot while I get going with REI. I'll look into this more though.

Calijess, I'll definitely consider owner occupied rentals when I transfer out in a year to two years to college.

As calijess implied, find an $80K property right now that you can move into, fix up, and resell in a couple years. You'll get a 10% discount on the property ($8K back from the government), you'll have enough for the down payment assuming you go FHA, and you'll likely make some good (TAX FREE!) money off the sweat equity in a couple years when you sell.

But, the tax credit only lasts through Nov 30, so don't hesitate!

Just my $.02...

Jscott, thanks for your reply. What you're saying is an awesome idea, but its not possible for me to move out of where I'm currently living - which prevents me from being eligible for the 10% discount.

I'm more interested in finding a multi-family apartment and renting out all the units. My biggest hurdle is my lack of funding for the down payment (only $4.5k right now), but it was once said "If You Can't Make Money Without Money, You Can't Make Money With Money."

I did more investigating and my Uncle suggested trying a downpayment kickback. He told me to find a building for $100k. In order to get 10% down I would need $10k. I could ask the owners who are selling privately to "kickback" $6.5k towards me so I could complete the down payment, while adding $6.5k onto the closing price.

Is this a good idea to overcome my downpayment problems? Would it still be possible to work with a realtor if I did this or would it have to be done privately?

Originally Posted by djs13

I did more investigating and my Uncle suggested trying a downpayment kickback. He told me to find a building for $100k. In order to get 10% down I would need $10k. I could ask the owners who are selling privately to "kickback" $6.5k towards me so I could complete the down payment, while adding $6.5k onto the closing price.

Is this a good idea to overcome my downpayment problems? Would it still be possible to work with a realtor if I did this or would it have to be done privately?

Are you planning on going with a conventional loan? Or selling financing?

If seller financing, you can do whatever you and the seller agree on. If he's desperate enough, he might take your $4K and finance the rest.

But, with a conventional loan, there are some issues:

1. Most conventional loans these days (especially commercial loans) are going to require at least 20% down, and potentially 30% or more. There may be some higher LTV loans out there available, but you'll have to talk to local banks who fund their own deals.

2. Conventional lenders will not allow you to get part of the downpayment from the seller these days. This was very common a few years ago, but not anymore.

Again, I would focus on getting funding from a very small, local bank (think 3 branches or fewer), or focus on finding a seller desperate enough to finance the deal himself.