Getting A Morgage!! help
Hi, I am trying to start investing in real estate, I have a property that I want to buy, and it already has tenants, the problem is that I don't have the 10% downpayment that so many financial firms require for an investment property, can someone help me out? What do I do?
Also, I am a college student, and I can probably pay like 3 maybe 4 % but no more... And I want to invest with my aunt who currently owns a house.
THANKS SO much !
Alex
Assuming your aunt is informed and qualified as to risk, you'll need to unlock her equity in the home via a 2nd or a refi-cashout, depending upon current status (perhaps she owns it outright?)...use those proceeds and you've got the down. However, best to fully analyze the downside to the pending acquisition, including worst-case scenario...you'll want to make certain this is not your last deal...you've got lot of opps ahead...like Warren Buffet says..."treat investing like a ten-punch subway pass, and your challenge is to avoid the majority of the really bad deals (which many investors buy anyway) in life".
Hi Alex,
Assuming that you've done your homework about the property ( cash flow analysis including mortgage payment, insurance, taxes, water/sewer, prevailing rent, repairs, certificates of compliance, sweat equity for the hard work you need to put in etc...), you can find some mortgage companies willing to finance the house 100% if it is a 1-4 family building.
What they do is give you 2 separate mortgages ( 80/20). The first one might run around 7% and the 2nd aroud 9.5% or even higher. I know these are really high rates specially these days. Also, these types of mortgages usually have a prepayment penalty for the first 3 years or so. But, it's definitely worth it because you will not use you own money ( you can have the seller pay the closing costs) nor pay a mortgage insurance and you can refinance later using a conventional mortgage and lower rate.
If you've never own a house, an FHA loan might be the best deal or your state version of the fisrt time home buyer program. The interest rate is very low and you can also get a down payment assistant. In Connecticut for example, CFHA is 5.0% while FHA is 6%.
Investing in real estate is risky, no doubt! But if you do your home work, you'll come up on top.
Good luck!