Submitted by mommy2boy t3_10l3nk4 in RhodeIsland
mommy2boy OP t1_j5ulfdv wrote
Reply to comment by Unique-Public-8594 in WHY ARE HOUSES SO EXPENSIVE by mommy2boy
My mother in law keeps telling us to buy a 3 family and rent out the 2 floors and us live on the 1st floor but it’s just not what I ever had in mind. I have a toddler and just want to have a backyard he can play in and also do laundry in my own home rather than going somewhere else to do it!
Unique-Public-8594 t1_j5urysg wrote
She’s right.
Because it doesn’t meet your expectations is no reason to continue to pay escalating rent.
The only way to get into the real estate market is start with what you can afford then gradually work your way up from there.
Zavehi t1_j5uw77t wrote
You can also use rental income on that property to offset that payment and buy another house after a minimum of 12 months. If you are a first time homebuyer there is no reason not to buy a multi. You get access to better programs to buy that property, a long term investment that will help you down the road and you aren’t paying rent anymore.
mommy2boy OP t1_j5uzcec wrote
What kind of programs?
Zavehi t1_j5v0eyw wrote
In this state mainly Rhode Island Housing, they just announced today a grant program for $17,500 towards down payment and closing costs. Not a lien, no payment, just need to have a 660 FICO and make below 112k a year. Outside of that program they offer up to 15k as a second lien towards down payment and closing costs normally. 15k and whatever your first mortgage rate is. As of today that would be 6% if you are below the income limit.
mommy2boy OP t1_j5v24lc wrote
My question is I’m assuming this is a one time thing? So would I not wait to use a grant it on a house we can afford after a few more years of saving? Genuinely would like your opinion
Zavehi t1_j5v3ujr wrote
Rhode Island Housings down payment assistance will exist forever, they have been around for decades. It only applies to first time homebuyers so you would only be able to use it on a first home.
The grant with no payment will probably be gone within a few months, end of year at the latest. It has to be used at the time or closing so you would be in contract on something soon ideally.
If you have the ability to take advantage of the grant (income, FICO, etc) I would recommend it. If you are facing a situation where you don’t feel comfortable going that fast or you have a credit or income issue as far as how you are paid I would get with a lender today who is someone who does Rhode Island Housing a lot and they can put you on the right path. Rhode Island housing is pretty lax on there guidelines relative to some other equivalents in other states but deposits are a big thing for them so if you are depositing cash a lot that would be an issue.
Even if you miss the grant, the DPA is still a good program. If you need some help with a lender, let me know.
mommy2boy OP t1_j5v4vws wrote
Thank you so much for the info I appreciate it!
magentablue t1_j5w8j03 wrote
RI Housing does free “classes” you can take. We did it when we were first considering trying to buy a house and it was helpful. They give you a ton of info and can offer a bunch of resources (realtors, lenders, etc).
Some grants and programs require you take these classes to earn their certificate, which is why we’d signed up originally. Ours had a few q&a sessions as we covered all the topics.
Highly recommend if you haven’t taken them yet. There’s a class for single family home ownership and another for multi family or properties where you’d be a landlord.
mommy2boy OP t1_j5w9x46 wrote
Thank you so much for the info!
Zavehi t1_j5wfuhy wrote
These classes do provide a lot of good info, especially for people who have no previous experience in the homebuying process. They are also a requirement for a Rhode Island Housing loan, so getting done up front just saves some time.
FAYCSB t1_j5vlmgp wrote
I bought a 2 family in 2014 for $190k. Renter upstairs paid half the mortgage, so I was able to save a lot more. Had our first kid there. Sold for $250k in 2018 to buy a much bigger, more permanent house. The $60k we made on the sale went a long way towards our down payment.
That house sold again for $400k last year. If you can find an affordable multi-family in good shape, I would definitely recommend it.
Status_Silver_5114 t1_j5vtsl8 wrote
Good shape being the key. Don’t buy a money pit. But a solid house with rental income is a winner to get started for sure.
climb-high t1_j5zj9ex wrote
Being a new homeowner is hard. Being a new homeowner and landlord to two families sounds dreadful.
Status_Silver_5114 t1_j5vtjad wrote
You could always not give tenants access to the yard and get that scenario for yourself. House prices (and lack of supply) are all over the place not just RI.
BingBong022 t1_j5von7s wrote
You can't always have what you want. It's about what is possible given your financial circumstances and what makes feasible financial sense. Your mom is right, buying a 3 family home and renting out two floors would result in you living essentially mortgage free or close to it
Mountain_Bill5743 t1_j5vvg2p wrote
If OP doesn't have the cash flow for a SFH, then they're unlikely to be able to afford the going rate for a multi-family. Rental income will only help with cash flow later on after initial investment/income assessment.
ProvBroker t1_j5ysju7 wrote
Lenders will allow some income of an occupied multi-family to count towards the mortgage applicants income for the purposes of preapproval and determining spending ceiling. So often times borrowers are approved for a much higher value on a multi-family home. So sometimes it can work out to be more affordable on a monthly basis.
BingBong022 t1_j5w2swe wrote
OP wants a Ferrari when they got Honda Civic money
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