Raleigh, NC · Member since 2016 · 2 posts · 0 votes
I am looking to buy my first home. I would like to use and have been approved for an FHA loan, because I don't have a lot to put down. I want a multi family property where I can live in one unit and rent one or more units.
I've been told that with an FHA loan the most I could get is an owner occupied 4 plex. Anything larger than that they consider "commercial".
I found a 7 unit building that is in my price range. Only three units however are rented, four are empty. Would it be possible for me to keep and occupy 4 units all to myself? And now call it a 4 unit building?
Each unit is only 500 sq ft, so it is not unreasonable to want a larger space. I can afford to let 3 units sit empty if need be.
Is there any way I could get away with this kind of plan? I could refinance in a year or so and then continue to rent as many units as I want to without FHA restrictions.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
10y
No way. Occupied or not, the appraisal will show that it has more than 4 units. The property won't qualify. Maybe you could get the owner to knock down some walls and take out some kitchens for you...
Raleigh, NC · Member since 2016 · 2 posts · 0 votes
10y
I think you missed my point. Let me ask the question differently:
What is the FHA's legal definition of a "unit"? Is there anything I can do to destroy/combine units to make only four prior to purchase?
Could it be as simple as removing/combining electric meters so there are only 4? I can make a "door" between 3 apartments to combine them with a sawzall in about 5 minutes. Or maybe they can be somehow converted to "storage units"?
I do not intend to have more than 3 tenants plus myself.