The timing is still right to buy a home, rates are down and it’s a buyers market. Could it get any better? You bet! How about buying your first home that is a 2, 3 or 4 family? Not only will you have an income stream coming in, you will also have a great start to building your real estate portfolio. What many people don’t realize is that they can use the FHA government insured loan to buy up to 4 units as long as they owner occupy one of them. In almost all cases the down payment is only 3.5% and the seller can even pay the closing costs up to 6%. Why such a secret? Probably because what doesn’t get talked about usually gets forgotten.
Let me give you some very interesting and wealth building examples. Lets assume you find a 3-family home selling for $175,000 with yearly real estate taxes of $10,000 and the property allows for a 3.5% down payment (cash flow has to equal total PITI 1 to 1). Your loan amount would be approximately $170,500 with mortgage insurance included. At a 5% fixed 30 year rate, the mortgage payment would be approximately $915.00. Adding in real estate taxes, mortgage insurance and property insurance, your total payment would be about $1,976.00. Assuming rents are in the neighborhood of $900.00 x 2, you could be grossing $1,800.00 in rental income, leaving you a whopping $176.00 that is left to pay on your mortgage payment. Starting to get the picture? Even if you have a vacancy the balance is about $1076.00. Probably not much more than what you would pay in a nice rental.
Not excited just yet? How about using gift funds and seller concessions in order to buy the same house with close to nothing out-of-pocket! And now to save the best for last, maybe down the road you are ready to buy your next owner occupied property and you completely rent this one out. Not considering any increase in rents, which you know is not likely, you could gross $2,700.00 and have a net income of $724.00 per month. This is not counting the deductions you will get from Uncle Sam. So, what are you waiting for? Get pre-approved today and enjoy all the wealth building strategies of real estate.
