Owner-Occupied multifamily?

[La Bibliotecaria Feroz]

Is this as good as it sounds? We hadn't thought of the idea until we happened to notice a listing for two individual structures on one property; the total is in our price range and we would live in one for a year or two and rent out the other, then ultimately move out and rent both. Cash flow seems good--the difference between the mortgage and the rentals (if we rented both) is at least $600.

Would love to hear from people who have done this. What happens when we want to move away from owner-occupied and buy ourselves a bigger house--is it hard to get a second mortgage? (We are in the very early planning stages and aren't sure if the place would work for us, but the market here moves sooo fast that I want to think about it ahead of time.)

[money_bunny]

I was told when I was looking at one, the two houses one property thing is unusual so comps can be tricky when it comes to financing.

[feelingroovy]

This is what we have.  A 3br house with a 2 br apt over the detached garage.

Our net housing costs are about $250/mth.  For us to rent this same house would cost at least $1400.  I don't know why everyone doesn't do this.

As for getting another mortgage, once you've been a landlord for two years, the bank will allow you to apply more of the rent to your income. I suspect this varies by bank and maybe state. You may have to have a signed lease on both units before being approved for another mortgage.  It depends on the debt/income ratio.

[La Bibliotecaria Feroz]

WOW that's a good deal! As for why everyone doesn't do it--supply, for one thing. We didn't like the one that inspired this question (Mr. FP went to an open house today) and we don't see anything else like it on the market.

[feelingroovy]

We live in a college town so there are a lot of houses with accessory apartments.

Detached versions are less common than others.

We just made it a "must have" feature when we bought.  Took about a year to find it but it was worth it. 

[zinethstache]

You will only be able to count a portion of your rental income, for the unit already rented. Typically banks will not speculate what you could possibly get for the unit you are currently living in so the best scenario is to ensure you have enough income to not need your own unit rented to qualify for the second mortgage.

We now have 4 mortgages and as first time landlords starting out, we did not get any "credit" for the incoming rental income to qualify for our loan, however the appraisal did include an extensive rental section to ensure that the rents would cover the mortgage.

It works best to have a good income stream for the build up phase of your rentals if you plan to get mortgages to purchase them. Good luck!