Author Topic: Financing Options (Can I FHA?)  (Read 850 times)

SimplyMarvie

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Financing Options (Can I FHA?)
« on: June 18, 2017, 12:12:47 PM »
This may be more a question for a mortgage lender, but I'd rather get some perspectives from smarter people first.

Currently, we own no property at all. We spend most of our time outside of the US on Government Orders, so we sold our last house (because I was terrified of the pipes freezing) in 2015, and haven't bought anything new.

I've been considering a four-plex in my hometown as the perfect option because we'd be able to make it cash flow with three units and keep one available for our family. This solves a number of logistical problems, including giving us a place to stay between assignments and a bolt-hole for Mr. Marvie if we got evacuated (our new job? Not such a garden spot, actually...). It also gives us a permanent abode in our low tax state of residence to keep us from accidentally becoming residents out east, which would cause my kids to lose out on a great tuition deal for college. I was also thinking that if we incorporated it would let my currently stay-at-home spouse earn some income through the corporation which helps us a bit at tax time through some state tax breaks for dual earners.

I've got my eye on a fourplex in an up and coming neighborhood that is at a decent price and which cash-flows. I'm wondering if an FHA house-hack is an option here? We'd be able to take possession physically, and we'd be legally resident in the home since our residence abroad is in government housing that we only occupy temporarily, but we wouldn't physically have our bodies in the unit 24-7-365 the entire first year, since I'll be on a TDY in the DC area, and then we'll head overseas. We could put a larger downpayment and do conventional financing, but that would put us in an icky position if the house suddenly needed major maintenance, so if that was the only route we might decide to wait a bit (or take on my mum as a business partner.) instead.

rothwem

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Re: Financing Options (Can I FHA?)
« Reply #1 on: June 19, 2017, 07:50:26 AM »
This may be more a question for a mortgage lender, but I'd rather get some perspectives from smarter people first.

Currently, we own no property at all. We spend most of our time outside of the US on Government Orders, so we sold our last house (because I was terrified of the pipes freezing) in 2015, and haven't bought anything new.

I've been considering a four-plex in my hometown as the perfect option because we'd be able to make it cash flow with three units and keep one available for our family. This solves a number of logistical problems, including giving us a place to stay between assignments and a bolt-hole for Mr. Marvie if we got evacuated (our new job? Not such a garden spot, actually...). It also gives us a permanent abode in our low tax state of residence to keep us from accidentally becoming residents out east, which would cause my kids to lose out on a great tuition deal for college. I was also thinking that if we incorporated it would let my currently stay-at-home spouse earn some income through the corporation which helps us a bit at tax time through some state tax breaks for dual earners.

I've got my eye on a fourplex in an up and coming neighborhood that is at a decent price and which cash-flows. I'm wondering if an FHA house-hack is an option here? We'd be able to take possession physically, and we'd be legally resident in the home since our residence abroad is in government housing that we only occupy temporarily, but we wouldn't physically have our bodies in the unit 24-7-365 the entire first year, since I'll be on a TDY in the DC area, and then we'll head overseas. We could put a larger downpayment and do conventional financing, but that would put us in an icky position if the house suddenly needed major maintenance, so if that was the only route we might decide to wait a bit (or take on my mum as a business partner.) instead.

Yes, you can FHA with up to 4 units, owner occupied. 

Something to think about is the management of the property though.  One of the reasons you buy a multi-unit owner-occupied property is so that you can save on the management fees.  If something is wrong with the place, you can fix it pretty easily, or call someone who can.  If you're in Iraq, Afghanistan or some other place on the other side of the world, you're going to have a tough time getting up with contractors in a timely manner, so a property manager is going to be an expense you have to pay.  You're already not making money on one of the units, so adding a PM is even more cost.  Plus thinking about the upkeep of the home. 

If I were you, I'd just keep stacking that hazard pay and invest it.  I think you'd do better than with a fourplex, unless the numbers were fantastic, and I'd be skeptical about those unless I saw the place my self. 

CptJack83

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Re: Financing Options (Can I FHA?)
« Reply #2 on: June 19, 2017, 08:34:26 PM »
Double check the FHA loan limits in your area.  FHA loan limits are often less than conventional.  Also if you are military, check to see if you are eligible for a VA loan.  You can use that on owner-occupied multi-family.  The loan limits are much higher than FHA and there is no PMI.  VA is superior to FHA if you are eligible for it.