Hey BP Community - first post here from a new investor. My wife and I are finally settled down, and have been looking around the area for multifamily properties to owner occupy as a lower point of entry and lessen the risk of getting started, as we would expect to pay that mortgage anyway. We finally found a property that is if interest, but running into a unique situation. The seller is interested in renting the property back for a short period of time.
The property consists of two separate buildings. The first building is three units (all leased up) and the second is a single family home that kind of has an in-law suite. The single family home is where the current owner is living. A quick look at this seems like it would qualify for FHA or conventional financing methods as an owner occupant property, since we would live in the single family home ourselves. The interesting part that we just found out is that the owner would like to turn around and rent the property for a few months until they got everything in place to move (thinking March).
This brings me to my main question. If we were to purchase the property under conventional means as an owner-occupied property, can you rent out "rooms" in one of your units and have it still qualify as a single unit (i.e. keeping us under the 4-unit max to qualify for less than 20% down)? Since there is the in-law suite in the first level, we could potentially rent that out to the current owner, and move into the rest of the home in the interim.
If not, and this would take us over the limit, any other creative strategies to approach this? I've debating asking about seller financing for a short period, in which we wouldn't have to move into it right away. Then we could potentially refinance the owner out of the property with a standard bank loan when they would be ready to move. If we go this angle, can you refinance a seller financed property with conventional means? Or would we need to have 20% (or more) equity? Again, not certain that it is even an option, as they might need the capital upfront to loom for their new home. Also wondering if I could try a lease to own, but realize that we would likely spend more during that whole process than the other two methods.
Really appreciate any thoughts that might be out there. Thank you!