FHA loan turned into an investment property

Vancouver, WA · Member since 2019 · 6 posts · 1 vote

I am curious if anyone here has ever used a FHA loan to purchase a property and after about a year or so (I understand FHA loans usually require you to occupy a house for a certain amount of time) turn it into a rental property?

I am curious to hear people's input on any negatives or positives on this or any other experiences with using a FHA loan to get their first rental property.

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Matthew PorcaroBusiness Member

Lender · Long Island, NY · Member since 2016 · 456 posts · 336 votes

Originally posted by @Camden Keller:

I am curious to hear people's input on any negatives or positives on this or any other experiences with using a FHA loan to get their first rental property.

Camden -

I used this exact strategy for my first flip.

I bought a foreclosure duplex using a 203k FHA loan. The 203k gave me enough money to rehab the foreclosure, and make it liveable.

It was a large rehab, and took 8 months to finish. Once it was done, I realized that I had built enough equity in it after the rehab to refinance out of the FHA loan (no more mortgage insurance, no longer had to live there, etc). Once I did, I rented out both units and still hold the property today.

If you have any other questions on how I did it, feel free to reach out.

The 203k Way

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Peter Dimaira
Jupiter, FL · Member since 2018 · 8 posts · 1 vote
7y
I actually took out an FHA Loan for an investment property in Colorado a couple years back and I was thinking the same thing. You're better off holding the property and paying towards it to receive a better ROI. That's if you're looking to invest in more property. In my experience when you approach a bank about a loan wether it be for a commercial property lender or hard money lender they always look to see if you own a home or at least have financed one.
You also have to remember that with FHA loans they do an inspection and certain homes are not qualified because of damage to roof or foundation and I am sure several other things as well. I will attach an inspection infographic so you can see what I am talking about.
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Peter Dimaira
Jupiter, FL · Member since 2018 · 8 posts · 1 vote
7y
Please let me know if this helps. I'd be happy to send you more info
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Matthew PorcaroBusiness Member
Lender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
7y
Originally posted by @Camden Keller:

I am curious if anyone here has ever used a FHA loan to purchase a property and after about a year or so (I understand FHA loans usually require you to occupy a house for a certain amount of time) turn it into a rental property?
I am curious to hear people's input on any negatives or positives on this or any other experiences with using a FHA loan to get their first rental property.
Camden -
I used this exact strategy for my first flip.
I bought a foreclosure duplex using a 203k FHA loan. The 203k gave me enough money to rehab the foreclosure, and make it liveable.
It was a large rehab, and took 8 months to finish. Once it was done, I realized that I had built enough equity in it after the rehab to refinance out of the FHA loan (no more mortgage insurance, no longer had to live there, etc). Once I did, I rented out both units and still hold the property today.
If you have any other questions on how I did it, feel free to reach out.
The 203k Way
Website View Page
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