4 PLEX ---- HOME STEADING YOUR PLEX ? Or NOT ?

[Nicholas Moffett]

So I have a 4 plex Im getting serious with and I think my offer will go through.
I am in Florida, and this is going to be a real good property that is 1/4 mile from the beach

Heres the deal

$250K  - 50 cash 200 bank note - And I will be putting roughly 50 cash into it for repairs.
I can do a note at 3.5 for a personal loan and homestead it 
Or I can do a note at 4.5 as an investment property

I have never done a plex like this, and I have no other properties homesteaded or currently owned under my name, so I am wondering what the best idea is.  Should I take one of the units as my primary residence and homestead it and save the 1%, or should I do it as an investment, not homestead it, and go that route with a higher percentage.

With the personal note, I will have to use 1 of the units as my primary residence for 12 months, so I lose out on the rent for 12 months which would be $800X12months but I can homestead and do the 3.5  Or would it be better if I did an investor deal at 4.5% and got to make the extra 800 for the first year from the unit I wont be living in.

What is the best overall plan ? Or would a REIT/TRUST or something like that be better. Im going to consult with a RE attorney b4 closing, but this is a preliminary.

[Mike Wood]

@Nicholas Moffett For an investment loan with 2-4 units, your max LTV would be 75%, so assuming the sales price is $250k as indicated, you will have to come up with more down payment, at least $62,500. You would also have to have cash reserves for at least 6 months, which the bank could required to be tied up.

You mentioned you would loose the rent, but aren't you paying rent where you live now? Likely that is a wash.

If you are able and willing to live in one of the units, that's what I would do.  In addition to lower interest rates, you will be tax break when you live there (as Florida is a homestead exempt state), and your insurance will likely be cheaper.

I would look for a conventional loan with a 5-20% down payment requirement. If you can afford the 20%, then that would eliminate the requirements for PMI. If I could not do the 20% down, I would look to minimize my down payment so that I had the cash to complete repairs.