Single-Family Rental Mortgages - Commercial, Conventional or FHA

[Lisa Lanata]

I have submitted paperwork to a commercial lender to see where I stand financially to possibly acquire two properties as rentals in a college town and rent to students. I will meet face-to-face on Monday but he is telling me that commercial loans have more leeway with qualifying but interest rates are usually higher, they usually require more than 20% down in some cases and are 15-20 years, hardly ever 30 years. He said conventional will not do investor property, so that leaves me to FHA/FAnnie, I guess. I would rather a 30-year mortgage, so what are my options? I am considering buying the first house as my primary to get the best rates and terms and as a conventional loan and then making it a rental within 1-3 months if that is legal. I believe they make you sign a paper saying you will owner/occupy? I will put at least 20% down, but I understand FHA still charges PMI or MMPI even if 20% down. Any advice on how to get investor properties for 30 years and not 20?

I am looking for multi-family but they are hard to come by and the ones that do come up are in locations I don't care to own property in even though they seem like great deals.   My friend says he has some in these areas and although you get them at a good price, the renters don't pay, so that offsets their low value??

So confusing on what way to go, but I am ready to buy something.

LOL.... I am also looking at vacant storage facility......LOL  I am all over the place..

[Brian Pleshek]

Welcome to BP @Lisa Lanata. If you're looking at FHA, you'll probably have to live there. I think intent is what it's all about. You intend for this to be a rental, so it would be dishonest to buy it and tell them that you're going to live there knowing that you are going to move out in a couple of months. They will notice when the bills are going out to some place other than the property address. It's possible that they might call the loan due once you're no longer owner occupying. If you were talking a couple of years instead of a couple of months, you could probably do this.

If you don't have the funds to do a commercial loan, you may need to save a little more or maybe go in with another investor perhaps with an option to buy them out.

Brian