fha 4 plex

10 Replies

hello my name is Marcus Winchester and i am what you would call a newbie in the real estate investment world. But my questions are have any of you or know someone that has started with a four unit with FHA backing and can tell me the good and bad stories. Thanx in advance


I am currently buying my first 4plex using an FHA loan, so I can at least share what I know based on having bought and sold a previous home using an FHA loan.

Basically, the good would be that you can get into a 4plex with as little as 3.5% down, so if it's a solid property all around, FHA is a great way to get around getting into a rental property without much cash up front. However, one caveat to this would be that it would have to be owner-occupied, at least for a little while. Although I'm not 100% sure, I believe that the owner-occupant stipulation is around a year, but definitely discuss this with your lender before you make any decisions. In the event you move out before it's ok to do so, you would essentially be committing occupancy fraud, and if im not mistaken, it can trigger an acceleration on your loan."

thanks alot i have read that before but i believe i can do a year with no problem.

You may also want to be careful with your numbers here as well, if I am not mistaken, with FHA you now have to pay PMI for the life of the loan which can be expensive and cut into NOI. Now you can refi conventional later and get rid of the PMI but you will probably need 20% down which kind of defeats the purpose. So make sure you talk to your lender and see how much PMI will be.

But if you can make the deal work with accounting for PMI then by all means go for it, buying an owner occupied 4-plex seems to be a popular strategy for getting into REI

Yes, Marcus,

All the above seems correct. I do know of someone who used the FHA to purchase and rents the units out to Vets, ensuring regular rental income. The purchase and rentals have been very successful for him. He just asked for an increase in rents from the VA and got those without question. You just have to meet with the Section 8 inspector to make sure all units are in compliance with their requirements for safety and function ability. FHA loans are a great way to go-just live in one unit for a year, and you do have to pay PMI.

@Margo Roberts  

Are you allowed to target/ask for veterans specifically on section 8? I thought they had their own housing service/coordinating agency

I believe he did go thru the Veterans Housing agency to get access to his list of vets needing housing.  It seem this agency is one arm of Section 8, but I am not an authority on this.  Good luck, Richelle.

@Margo Roberts  and @Richelle T. I believe the program you're referring to for Veterans is the HUD-VASH program. It is a hybrid VA-Section 8 program where your PHA does the actual issuing of vouchers, paying of rental subsidies, usual safety inspections, etc. and the VA (or in rare cases a contractor) handles the screening of vets, provision of other supports, helps coordinate the paperwork, regularly checks in with the vet, so on and so forth. Sometimes your local PHA will be able to point you to the program coordinator locally, but its usually easier just to call your local VA clinic/hospital, brave the phone tree, and ask to be connected to the HUDVASH program. If either of you want more information on the program or a contact for your area, feel free to PM me. I'm a social worker for the program in my area.

Thanks for your input Bradley.  There is always appears to be someone of knowledge that seems to emerge.  That's great information to know, as I was thinking about renting to vets myself.

@Bradley Bogdan  great info - thanks much!  I have worked with Section 8 for awhile but never heard of/tapped into the HUDVASH program.  I will be checking that out tomorrow!

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