Selling an FHA loan property to my own LLC after 1 year occupancy

2 Replies

Hi Everyone,

I have seen some similar posts relating to the topic, but none seem to fit the purpose of what I am looking for.

Essentially, I am thinking of purchasing a multi-family property under an FHA mortgage, renting out one unit and living in the other for one year. I believe this will allow me to have a small downpayment of 3.5%, while possibly benefiting from lower interest rates than a conventional loan.

After the one year occupancy period has passed, I was hoping to sell the property directly to my own LLC. This should allow me to be more protected and I can rent out the second unit for more cash flow. Does anyone know if this is possible to achieve?

Secondly, if FHA loans can be 'assumed', then would it be possible for my LLC to take over the FHA mortgage from myself to continue benefiting from the lower interest rates?I'm looking forward to hearing peoples thoughts on this.

I am trying to get myself into the real estate market, so I am a complete newbie here. Any info you guys can provide would be greatly appreciated.

Thanks,

Gary.

This is typically done with what's called a "quit claim deed", essentially a transfer of ownership from one entity to another. Beware of the common "due on sale" clause. Many traditional loans have one, and it means your lender can call your whole loan due if you attempt to transfer it. This doesn't mean it's not possible though, you just need to have a conversation with your lender and ask them if they'll act on that clause.

Why waiting the year? There’s usually no seasoning requirements with a transfer like this

@Gary Bracken The whole “must own in an llc for protection” thing is way over rated. Just get good insurance.  How many hundreds of thousands of dollars do you have that you’re trying to protect if your $500k to $1M insurance is not enough?

No, an llc can not assume or have an fha loan. Conventional rates are actually cheaper, especially after you get rid of PMI ( the MIP on an fha 3.5% down loan is for the life of the loan).