Yes you can purchase with just the 3.5%. Even if you cannot negotiate the seller credit, your lender should be able to give you a large credit to offset closing costs in exchange for a slightly higher rate. Since FHA pays large premiums (credits to the borrower) this should easily be accomplished.... more
If you have a strong track record of flipping houses an investor possibly would be interested in your proposal. You need to have a renovation team, a look at trends in the location you're proposing to purchase, and a good game plan. Typically commercial real estate agents and commercial property owners are your quickest source.
Your property can't be in a cluster of foreclosures. The real estate pundits contend the housing market is not going to "spring back": they're calling it a "bathtub" market, meaning that the housing prices may have hit bottom, however they're going to stay there for several YEARS.
Some options are finding a house in an area that has a high rental absorption rate so you can get a healthy tax shelter as an investment property or find a house you wish to live in for several years before selling. To make $100,000 after investing, you need to purchase a house in the North Shores of Long Island or in the higher end waterfront areas.