Investor · Mankato, MN · Member since 2016 · 6 posts · 1 vote
BP readers, I need your guidance. If I were to finance a multi family on an FHA loan... I'd have to first find a lender that is willing to work with an FHA loan, get preapproved, then also see what is FHA approved in the market, and then I'm ready to shop. If you were to break it down in more detail... does anyone know the process well enough to explain how to get an FHA loan and for the multi family Home that I want?
@Scott Anderson, a few years ago I bought a 4-unit with FHA financing (3.5% down). It's really not that much different than buying with a conventional loan...there are just some additional requirements in terms of the property's condition, cash flow (self-sufficiency rule), etc. Have you yet spoken with a lender or mortgage broker or agent?
It’s really no different than a SFH purchase. Most large lenders will do and FHA loan so I would just call a handful the rates should be fairly close. They will do a pre approval and then you are pretty much ready to start looking.
The inspection isn’t a big deal basically if the home is not in need of an major rehab work it will be approved. If you’re interested ask you lender about a FHA renovation loan. They are a bit of a headache but it is the easiest way you will ever get a bank to finance a rehab.
Once you have identified your potential property you need to look at the numbers closely. Living in a property allows you to fudge them a bit but if you push it to far then you may have issues cash flowing when you move out.
Remember to calculate you maintenance, capex and vacancies into the cost. It will be best if your rental side cash flows with these items subtracted and there is enough balance left to make a good impact on the mortgage payment. That all depends on how you budget. I pay all the expenses of my duplex out of pocket and save all of the rent each month. Remember to keep a few thousand bucks in reserve.
Good luck
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