Getting the Second Property?
I just recently closed on my first property this month, things are going well so far. It is an FHA loan and I currently owner occupy it. The other unit is already rented as well.
I am currently trying to find another property to buy with a friend who also owns a multi family in the same city, also an FHA loan. Our plan, initially, was refi on his property, pull the equity out of it and use it to put the down payment on the next property, Then eventually do the same with my property once the seasoning period was over on my property. We were hoping to use another FHA loan but after about an hour an a half conversation with a loan officer, she told me that none of it would be possible. The FHA due to the owner occupant criteria. And that my partner and I would have to wait 9 months or so to be able to get a loan that would suit us.
My question, I suppose, after hearing an hour and a half of no's is, are there any other good options for someone trying to get their second property? Apparently our funds are tied up but we are looking to get a deal done in the next few months if possible to keep the ball rolling. Any other advice or recommendations as to how to get financing for the next deal would be greatly appreciated. Thank you for your help!
The loan officer is correct. You can't get a second FHA while you still have one on your current property. And FHA loans are owner occupied loans, not for investments.
If you want to get an investment property, you'll need to put down 20%-30%. You'll need to find a partner with the cash or find a property with owner financing.
@Chris Perrin, you wrote: "Our plan, initially, was refi on his property, pull the equity out of it and use it to put the down payment on the next property". If your friend is close to being in his home for 1 year, and his equity has improved from 3.5% to 20%+* in that time, then he might not need you. I reckon you should suggest to him: "don't let me be the reason you wait longer than you need to in order to buy your second (primary) property"! All the best...
* [Unless/until he (and anyone with FHA) has 20%+ equity, then refinancing out of FHA is moot].
