Getting Married in 1.5 Years- How to Take Advantage of FHA?

7 Replies

Hey all- we have a pretty complicated question and would love some input from you more experienced folks.

I am 29 and my fiancee is 24.  She is graduating nursing school next week, and plans to get a job in the Tampa area, so that area is going to be our target market. I work for a tech company and can work from home. We currently rent in Atlanta and neither of us have ever owned any property.  Financially, we will be out of student loan debt by summer next year (2018).  Our wedding is in March of 2019. 

We are both leaning towards a house hack (duplex/quad) then some BRRRR deals, with one stipulation of being in our own 'nice' house before we have kids in 4+ years.

We have no idea how to take the best advantage of FHA loans. What would you do?

Thanks!

I would answer your question, but it sounds like you have the "right" answer already.  If you are comfortable house hacking (i.e. comfortable having your tenants next door), get a triplex or a quad as long as you can afford the down payment on a property that size.

One thing I would suggest is get as much set up (or at least researched) in advance as possible.  Talk to a CPA since your tax situation will be changing.  Look into the best way (for you) to track your income and expenses.  It can be as simple as an excel spreadsheet.  Get recommendations for a good real estate attorney now so that if an issue ever does come up you have someone in place you can talk to.  Get recommendations for a good handyman now because you will need it.  Etc. Etc.

Hi @Adam Lovell ,

The only reason why people go FHA is because they don't have enough capital or low credit. If you can afford to go to 5% down, you'll get a much better conventional loan. Your PMI will eventually drop off (PMI is on for the life of an FHA loan), you can buy a larger pool of properties with a conventional loan also. Tampa is also a super competitive market, and FHA loans come with more stringent guidelines in a lenders eyes, and Sellers aren't huge fans of FHA buyers.

Congrats on her graduation, and your upcoming marriage!

Hello @Adam Lovell , Welcome to the world of investing and welcome to the Tampa Market.  I got married in March 10 years ago and brought my wife back to my house hack that was still completely under renovation. Think kitchen down to the studs and the second unit unlivable. However, nearly 10 years later besides getting married that was the best decision I could have made. It paid my mortgage while I was just out of college and broke. It also gave early momentum on my investing.

To your question about FHA loans, I'd encourage you to talk with a couple mortgage brokers. They can walk you thru the pros and cons of different loans options and any first time home buyer programs. They can give you a real good idea of what to expect without pulling your credit. Let me know if you need recommendations.

Good luck to you!

@Adam Lovell congrats on the engagement! Make sure the property and fha is under only one of your names. That sets you up to buy more properties with each of you taking on properties individually rather than together. So if you get the first fha house hack, your fiancé can get another fha for the second house hack down the line. Fannie Freddie rules allow for 10 mortgages max per person so that means potentially 20 mortgages between the both of you instead of just 10.

You can talk to a cpa about this but you should be able to “rent out” one of the rooms in the unit you occupy to your fiancé as a tax strategy. That way, you can deduct more business expenses while basically “moving money” from your fiancé’s account to yours. Your fiancé becomes your legal tenant and it puts both of you on a more advantageous financial position combined.

Originally posted by @Adam Lovell :

Sounds like an FHA might not be that beneficial to us, but I'll certainly talk to some brokers and a CPA before we make official plans.

Great info, thanks guys!

Being an agent that has worked both the seller and buyer side of transactions in Tampa, I can tell you that if you have the capacity to get a conventional loan- go that route if the numbers are better. 

Sellers percieve FHA loans as more risky than conventional when vetting offers, and having represented many FHA buyers it takes a very aggressive type of negotiation to win in a multiple-bid situation.

Loan aside you would be smart to have some form of legal arrangement in place to deal with the property going forward. Do not simply assume life will be all roses going forward because you are engaged. That would be a serious business mistake. You are not married therefor this is only a business partnership. 

Make sure you include any necessary escape plans.