Can You House Hack Multiple SFRs On Single Tax Lot?

Question

This may be an area specific question, but I was hoping someone would be able to give me a quick answer to this question.

I'm looking to help my step-daughter and her BF get into a multi-family. I've found a pretty good deal on 3 SFRs on a single tax lot. I was wondering if this can be bought using an FHA/VA loan for owner occupied using the rental income as part of their income.

Also what's the general rule of thumb for a down payment % on such loans... contact lender or mortgage broker? I did one of these deals on a duplex many years ago but everything was done for me by my RE agent. So any and all input will be much appreciated.

Thanks,RL

Alberto De jesus · Answer

Is the property assessed as a multifamily or 3 SFRs?

For fha, generally you need to have the following requirements

1. 3.5% down

2. 580 credit score

3. The owner needs to occupy the property.

4. Property needs to be in what the bank considers rentable condition.

Randy (RL) Williams · Answer

Good point Tom. But most things are relevant I would guess. I would say that mineral rights in Oregon, unless they are in gold mining territory, may not be worth as much a mineral rights in Oklahoma where they are on full tilt with oil and gas exploration.

A small portion of my mineral rights are paying a small dividend. When or if they begin drilling on or near my mineral rights the value goes up. Especially if they strike oil or gas or both.

But putting the mineral rights issue aside, I suppose I simply need to contact the county assessor to inquire whether the property is considered multi family or not. Once that is discovered, then I will need to get in touch with some lending institutions to see if we can get FHA/VA financing for owner occupied.

Alberto, the properties are in very good condition with upside potential... mainly from the large lot. There is room to place 2 or 3 more homes. I'm thinking rezoning as multifamily or mini mobile home park as it could probably fit 5 or 6 MHs.

It is going to be owner occupied. My step daughter's BF has good credit and we have enough for 3.5% down.

And there is always the possibility that the owner could be talked into helping with the down payment if we agree to pay the listing agent and the listing agent could be persuaded to take their commission back in a note collateralized by mineral rights in Oklahoma.

Funny thing is the listing agent is the same agent I used to purchase a duplex 13 years ago. Strange coincidence... or providence?

Tommy White · Answer

I can almost guarantee the bank won't be willing to use mineral rights. But as it goes if you don't ask you already got a no.

My father has been trying to use mineral rights in his deals for more than 10 years amd hasn't gotten very far with it. Its a very subjective and expense piece of collateral to get actual value from.

Randy (RL) Williams · Answer

I might need to contact the Assessor. It's Salem OR, Property code R41B (Res, Class4, 1 Story Only, 2 Extra Houses)

Would a financial institution (bank/other) consider us using mineral rights in lieu of or in conjunction with a slightly smaller down payment?

I wonder if there is any other way to get this deal done if it doesn't qualify for an FHA/VA loan?