Background
I have never bought a home before, so I'm eligible to cash out my nearly ~15k IRA for a first home purchase. I'm also eligible for an FHA loan. However, my employment history is problematic in getting financing. I've been a 1099 and a W-2 employee sporadically over the last few years, hopped around jobs a lot, and therefore my income is hard to predict for lenders.
Goal
Get this cash out of the IRA and in to a property that provides positive cash flow. Living in it rent free is a bonus, not required.
Option A
I've shopped around many lenders, and the only viable option right now is an unqualified mortgage (aka "subprime") for 15% down. Still getting info on the variable interest rate. My friend suggests that I do the math and go for that with the intention of refinancing for conventional down the road.
Option B
I can get a W-2 job within a month, use the paystubs to get an FHA (hopefully). Not sure how long it takes to establish employment history, but I could be waiting up to two years for this route, all for that 3.5% down, 3.5% interest rate.
Problem
Psychologically, I'm tied to the FHA option because it's the only time in my life I'll be able to use it. I want to change my life situation to get it. I know it requires living in the property for 6 months after purchase, so it'll be harder to get positive cashflow right away.
If I get one of these unqualified loans, I can buy a rental property "sight unseen" in a good market and get some cash flow. But it means saying goodbye to the FHA forever.
Questions
I have never bought a home before, so I'm eligible to cash out my nearly ~15k IRA for a first home purchase. I'm also eligible for an FHA loan. However, my employment history is problematic in getting financing. I've been a 1099 and a W-2 employee sporadically over the last few years, hopped around jobs a lot, and therefore my income is hard to predict for lenders.
Goal
Get this cash out of the IRA and in to a property that provides positive cash flow. Living in it rent free is a bonus, not required.
Option A
I've shopped around many lenders, and the only viable option right now is an unqualified mortgage (aka "subprime") for 15% down. Still getting info on the variable interest rate. My friend suggests that I do the math and go for that with the intention of refinancing for conventional down the road.
Option B
I can get a W-2 job within a month, use the paystubs to get an FHA (hopefully). Not sure how long it takes to establish employment history, but I could be waiting up to two years for this route, all for that 3.5% down, 3.5% interest rate.
Problem
Psychologically, I'm tied to the FHA option because it's the only time in my life I'll be able to use it. I want to change my life situation to get it. I know it requires living in the property for 6 months after purchase, so it'll be harder to get positive cashflow right away.
If I get one of these unqualified loans, I can buy a rental property "sight unseen" in a good market and get some cash flow. But it means saying goodbye to the FHA forever.
Questions
- What process can you recommend to evaluate these options? (I use the bookend method right now—projecting best case and worst case financial scenarios for each option, looking at a 10 year runway)
- Are there any other options I haven't thought of?
- What are your favorite methods for evaluating real estate markets for cash flow?
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Last edited:
Membership Required: Upgrade to Expose Nearly 1,000,000 Posts
Ready to Unleash the Millionaire Entrepreneur in You?
Become a member of the Fastlane Forum, the private community founded by best-selling author and multi-millionaire entrepreneur MJ DeMarco. Since 2007, MJ DeMarco has poured his heart and soul into the Fastlane Forum, helping entrepreneurs reclaim their time, win their financial freedom, and live their best life.
With more than 39,000 posts packed with insights, strategies, and advice, you’re not just a member—you’re stepping into MJ’s inner-circle, a place where you’ll never be left alone.
Become a member and gain immediate access to...
- Active Community: Ever join a community only to find it DEAD? Not at Fastlane! As you can see from our home page, life-changing content is posted dozens of times daily.
- Exclusive Insights: Direct access to MJ DeMarco’s daily contributions and wisdom.
- Powerful Networking Opportunities: Connect with a diverse group of successful entrepreneurs who can offer mentorship, collaboration, and opportunities.
- Proven Strategies: Learn from the best in the business, with actionable advice and strategies that can accelerate your success.
"You are the average of the five people you surround yourself with the most..."
Who are you surrounding yourself with? Surround yourself with millionaire success. Join Fastlane today!
Join Today
