FHA on a multi-family or conventional loan on a single family

3 Replies

Hi All,

This is going to be my first deal. And, I would rather not put too much for the down payment due to my lack of experience. I live in San Diego North County and in my area, a single family starts at 350K and a multi-family starts at ~750K. I do not want to put more than 30K for down payment. So, do you think it is better to invest in a multi-family with FHA 3.5 percent or getting a conventional load with 20 percent down on a single family? Which one is better from the investing standpoint?


try to get money without a bank . BANK is the last resort . Family tree tree , friends , friends of friends aunts uncles girlfriends ex-girlfriends , anyone before going to a bank . Raise money first , that's how i got started . IT'S NOT EASY.

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By multi family do you mean 5+ units? Have you looked at actual sold properties for your multi family starting price? I consider myself an expert on an area very close to your listed location (very close to Vista). I know what duplex to quad sell at (possibly every single one in my market). Your starting price would be way above average sold price for duplex to quad (certainly way above the start at price). If you are talking 5+ units your price still seems a little high as the stated starting at price (at least for 5 units). FHA I am fairly certain cannot be used for 5+ units so I assume you are intending duplex to quad.

What I find for duplex to quad is comps using the current MLS listing is useless. Many duplex to quad units will never sell near the price depicted on the MLS. They make no sense at that price for investors. Duplex to quad are mostly purchased by investors.

I am evaluating 2 properties (both duplexes) in my area of expertise and therefore today pulled comps (cannot get much more current than that).  I would be able to email you the comps pulled (sold properties near my subject properties) if you message me your email and indicate that you would like to see the comps I pulled.  Of course I will need to redact my subject properties (both are off market properties) as well as identifying info (This offer is only extended to the OP because I only have so much time that I cannot do this on a regular basis - contact a realtor if you want this done for you and you are not the OP). 

As for what is better to invest in SFR or multiplex there are cases that could be made for each that there are many posts dedicated to. In general, supply and exit is easier on SFR. Multiplex scale easier and typically have better cash flow (excluding some off market SFR because there are so many SFR it is easier to find better/more off market deals). I have a single SFR and it is my worst performing property but it is also my ex-home and therefore was not purchased to be a good rental (which may be a bigger reason for it being my worst performing property than the fact it is SFR). So you likely need to do your own research to determine whether SFR or multiplex is the correct choice for you (I could make a case either way but for me I chose duplex to quad and expect to shortly move into the 5+ unit properties).

You likely know this but FHA requires owner occupancy so you would be house hacking a multiplex. Just making sure you realize you will need to live in one of the units. I think house hacking is a good approach when young and starting out.

Good luck