How can I leverage my 1st multifamily home (FHA loan) in PR to buy my next property?

Question

Good day BP members!

I bought my first multifamily in Puerto Rico in February 2025 using an FHA loan. I live in one unit and will soon start renting out the other. I'm now planning ahead for my second property and want to make sure I'm setting myself up the right way.

• 1. Once I start building equity, what’s the best way to access it? cash-out refinance, HELOC, or another loan option?
• 2. Since my current loan is FHA and owner-occupied, what’s the smartest way to qualify for another mortgage? (Conventional, DSCR, or waiting until I refinance?)
• 3. How soon can I use the rental income from my current property to help me qualify for the next one, and what documentation do lenders usually require?

I’d really appreciate any insight from those who’ve scaled from their first FHA property into a second or third rental

Seth McGathey · Answer

for the HELOC vs refinance question, that is going to come down to the numbers. If you have a low interest rate on your mortgage it will almost always be better to get a HELOC so that you get to keep your good rate. Also, there is the benefit that you only have to pay interest on the part of the HELOC you are using. So let's say they give you $80,000 for your HELOC and you use $50,000 for a down payment. You start paying interest on that $50,000 but don't pay anything for the remaining $30,000. If you just refinance, whatever money you take out of the original property will immediately start costing you interest. Even though you haven't used it for anything yet.

One final note on that part, if you property is not cashflowing very much be aware that cash of refinancing will almost certainly make it negative cashflow. Because by definition a cash out refinance is giving you a bigger mortgage than you had before. Which isn't a problem if you had a really high interest rate before and now it will be lower. But likely you are going from low rate to high rate or same rate to same rate.

Awesome that you are making things happen though! Best of luck!

David Krulac · Answer

Buy another house or multi up to 4 units using FHA, 3.5% down.  Rinse and repeat.

Kiara Crespo · Answer

Are you familiar with the process of going from one FHA to another? I’ve read I could use another FHA since I’m moving from PR to NYC for work.

Kiara Crespo · Answer

Elealeh,

Thank you so much! It was definitely a mission getting my house there! I'm changing bases for work back to NYC how can I use the FHA to fund another house?

Elealeh Fulmaran · Answer

Nice work getting that house hack done. For equity access, favor a HELOC on the property once it’s stabilized for flexibility and pay interest only on what you use; consider a cash‑out refi later if rates and fees pencil better for long‑term holds. For loan two, you’ve already used FHA, so look at conventional for another owner‑occ (after living there per occupancy rules) or a DSCR loan for a pure rental if the rent covers the payment; pick based on cash flow and paperwork tolerance. You can usually use rental income once you have a signed lease and/or the appraiser’s market‑rent schedule, plus proof of deposit and a few months’ payments; lenders will tell you exactly what they need. Next step: get your current unit leased, collect a clean lease and deposit, and price both a HELOC and a conventional or DSCR term sheet side by side to see which path gives you the strongest cash flow.

Kiara Crespo · Answer

Seth,

I appreciate the prompt and detailed response!!!

How can I leverage my 1st multifamily home (FHA loan) in PR to buy my next property?

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