F&I Gurus.. Follow Me.. LLC, FHA Under 80%, Paying Commissions.
In my area of TN, the market is HOT. Our experience in REI is limited with one rental and some vacant land. Looking to expand, here's what I'm thinking.... My Grandmother has a trailer (30 yrs old) on a lot, in a subdivision, that is slowly transforming into a SFH neighborhood. Eventually she will be made an offer by and investor or builder to sell her ~1/2 lot.
I'm looking at a condo today in consideration of purchase for my Grandmother to reside; likely for the rest of her days. I will purchase the home and charge her half rent in return for deeding her lot over to me. The lot may have a value of 15k, so it's not like she's sitting on a golden egg.
Here's where my rabbit hole of a thought process comes into play. The condo is listed at 190k and was already appraised for 200k. We have an LLC for our current and long term buy and holds. As mentioned, we have one recently acquired rental and some vacant land bought with cash. Can I use the entity and apply for an FHA loan? Personally, we have great credit and own a home with a conventional mortgage. So, naturally, I'd be a personal guarantor on the FHA loan for the property in which my grandmother will live. Thankfully, it's a three bedroom condo, so one of the rooms will serve as an office for the LLC to conduct business; satisfying the owner occupancy aspect.
I'm not finished.... As mentioned, the market is hot here. That is not stopping me from seeking a great deal. In my offer, we're considering a sale price of $145k plus... we will pay 5% toward whatever escrow wants to use in their verbiage (basically commissions). My train of thought is that the seller might be willing to accept the lower sale price since I'm willing to pay their commission fees.
Can we use a conventional mortgage and pay 20% down vs the 3%? Yes, but we'd also like to keep those funds liquid. Since we are purchasing the home below 80%, would we be able to purchase without PMI, despite using FHA?
So much to process and consider.... Which is why I'm here. Please feel free to poke holes in my thought process or provide additional ideas. For example, I know technically, you're supposed to have 2 years of experience with the LLC to qualify for an FHA loan. But, there are also lots of things that an 800 guarantor with substantial W2 income might be able to overcome. Am I wrong?
TIA,
Chris