Miami, FL · Member since 2019 · 42 posts · 7 votes
Hi everyone, i was just wondering if useing an FHA loan to buy a duplex up to a 4-plex is a good idea? Surei will live on the property for one year but i asked my friend who owns 30+ properties and he said its bad because i will be over leveraged. Can someone explain this? Because as i do my reserach it seems like people are doing this alot and it works for them. So what does my friend mean? Thank you guys!
He means if property values drop you will own a property that you cannot sell for what you owe. Or, he means if something major breaks and you don’t have the money to fix it, you have no way of refinancing to get the money to fix it.
And, he is wrong that it’s a bad idea. You’ll have a 30 year fixed rate mortgage, so you can wait out any downturns in the market. It’s a great way to get started with limited cash. If a four plex, the other three rents may pay for all expenses. If a duplex, the rent can greatly off set your mortgage. And you can get a home warranty (ask seller to purchase) for 12 months so you can mitigate large expenses for a year.
Go to the search function in BP. There are hundreds of posts and blogs on how to do this.