4 unit property as a primary residence

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Hey all, I have a property I currently live in with a couple roommates so I don't pay my mortgage at all. I was thinking of possibly renting my house out to them and purchasing a 4 unit property. Can I call it my primary residence if I live in a unit and rent out the other 3? My thought is that I can minimize my down payment by doing this. Has anyone done this and what down payment was required?

I live in Metro Detroit area by the way.

Thanks!!!

@Hayden Hirzel this is a very popular strategy here on bigger pockets. You will often hear this strategy called "BRRR" (buy, renovate, refinance, repeat) here on BP, but the reality is this has been around for decades. I work with quite a few clients who have done this here in the Chicago western suburbs, and one of the things I always tell them is that the area building stock really determines whether or not this strategy is viable. Most of the suburbs where I work (Oak Park, Forest Park, Berwyn, etc) have a lot of 2-4 units, so it is possible to find good deals if you buyers are patient. There are plenty of areas where this won't work because the building stock is all single family homes from the 90's or 2000's. I am sure the Detroit area has a lot of pockets where there is the correct building stock to pull this off. You should network with some local investors and find yourself an agent who specializes in this type of investing.

@Hayden Hirzel one update to @Jake Stuttgen posts about reclassifying your first property. I don't think you need to do that if you've lived in your current home for more than a year. I recommend you go to coffee with a lender or banker to ask them what they think. Good luck with the house hack!  

Yes!  We bought a four plex and lived in one unit and rented out the other three.  Just finished up 4 years.  You pay no rent and someone else buys the property for you.  If you can live in a small space, it's awesome. 

Originally posted by @Jaysen Medhurst :

@Hayden Hirzel, yes a 4-unit (that's the limit) can be your primary and you'll still be able to leverage of all the owner-occupy advantages available (low DP, lower rate, special programs, etc). This is how a lot of folks house hack.

I know for an Fha loan thats your primary residence its 3.5% down on a sigle family home. Would this still be the case for a 4 plex thats your primary resident? or would it be more?

Originally posted by @Hayden Hirzel :

Hey all, I have a property I currently live in with a couple roommates so I don't pay my mortgage at all. I was thinking of possibly renting my house out to them and purchasing a 4 unit property. Can I call it my primary residence if I live in a unit and rent out the other 3? My thought is that I can minimize my down payment by doing this. Has anyone done this and what down payment was required?

I live in Metro Detroit area by the way.

Thanks!!!

 Yes.  I currently own and live in one of my buildings that is a four unit.  four is the limit for owner-occupied financing though.  

@Hayden Hirzel I have been looking into doing something similar here in Southwest Florida. I currently do not own any property so this would be my first investment so it is a bit different than your situation. However, from what I have gathered you would still need a 3.5% down payment if you're able to use FHA. From people I have spoken to you can use FHA more than once but there has to be a valid reason such as outgrowing your first home, etc. Being as though you have turned your first home into an investment I do not see how you would be able to qualify for an FHA on a second home particularly a multi-family complex. Here is an excerpt from Riverbank Finance:

"In general, a borrower may have only one FHA mortgage loan at one time. If at some point they want to obtain another FHA loan then the first one needs to be paid off before applying for another one. However, there are exceptions to that rule according to The Department of Housing and Urban Development (HUD). They will allow a borrower to have two FHA loans but only under certain circumstances such as a bigger family size or because of job relocation.

Although the general rule only allows a borrower to have one FHA loan at a time, HUD also allows borrowers to have multiple government insured mortgages under the right circumstances, depending on their individual situations and what has changed since the close of their first FHA loan."

You can use the rent from your primary home and the rent from current renters of the MF you intend to buy as income when applying for a loan whether it be FHA or Conventional if you need help with your income and expense ratios. As I mentioned I haven't purchased my first property yet but I have been doing a lot of research so I hope I could help. If I am wrong or there are other strategies please share with me so I can learn as well! All the best!