Can I do an FHA 203K on a lot with two duplexes on it?

[Bria Bacon]

Hello all. I'm a newbie investor based in Atlanta looking to invest in my 1st multi-family property using the FHA/FHA 203k loan. I found a fixer-upper property that has two duplexes on one lot. They were originally duplexes, but have both been converted to single-family homes. My idea is to do the FHA 203K and renovate them fully, converting them both back to duplexes. I found another lot that had a quadplex & a SFH on it. I like the idea of living in the SFH while renting out the quadplex. Will I be able to do the FHA loan with two properties on the same lot? Is this feasible when there are two homes on the same lot w/ two different addresses? Any insight/pieces of advice are helpful!!

[Michael Dumler]

@Bria Bacon, this is all nuanced. I could be mistaken, but this will likely not meet FHA underwriting if two separate addresses exist. Both properties would need to be on one parcel under one address. Moreover, I would assume there would be some underwriting interference if the properties are converted from SFHs back to duplexes. What does the tax ID indicate? What is the lot zoned as?

[Lateefah Mathews]

Quote from @Michael Dumler:

@Bria Bacon, this is all nuanced. I could be mistaken, but this will likely not meet FHA underwriting if two separate addresses exist. Both properties would need to be on one parcel under one address. Moreover, I would assume there would be some underwriting interference if the properties are converted from SFHs back to duplexes. What does the tax ID indicate? What is the lot zoned as?

I completely agree! While the FHA 203k does permit renovations, converting from a single-family residence back to a duplex might encounter some zoning and occupancy issues, especially with two properties sharing the same lot but having different addresses. Also, any structural alterations, such as demolishing or adding walls, must strictly adhere to their guidelines, which I assume you'll need to consider for your conversion project.

[Wayne Brooks]

The “2 addresses” is not an issue….it only matters that they are both on one parcel/tax id no. As long  as the current zoning allows 4 units, it should qualify. 

[Wencheur Antoin]

Just to learn from Bria's question, Given that the 203k FHA loan is for SFH and small multifamily, the situation of having a quad and a SF under the same address does not make it over 4 units?

[Wayne Brooks]

@Wencheur Antoin Nope, that’s 5 units. 

[Wencheur Antoin]

Quote from @Wayne Brooks:

@Wencheur Antoin Nope, that’s 5 units. 

 Exactly @Wayne Brooks, that being said FHA loan is no more a applicable. right?

[Wayne Brooks]

Quote from @Wencheur Antoin:

Quote from @Wayne Brooks:

@Wencheur Antoin Nope, that’s 5 units. 

 Exactly @Wayne Brooks, that being said FHA loan is no more a applicable. right?

Correct