Riverside, CA · Member since 2017 · 13 posts · 18 votes
I just closed on a 4-plex purchase with an FHA loan in Tucson Arizona. After 6months of jumping through hoops of securing financing as a self-employed person, searching for the right property, getting the offer accepted, negotiating roof repairs with the seller to meet the FHA guidelines, I finally got it closed.
purchase price: $243,000
I got the seller to pay $5000 to cover part of my closing cost.
I got a FHA loan 30-year fixed interest rate at 4%.
The 4-plex has two 1bedroom 1bathroom units and two 2bedroom 2bathroom units. Fair market rents are $650 for the 1/1 unit and $750 for the 2/2 unit.
Monthly PITI payment is $1634.
I’m going to occupy one of the 1/1 units. The other three units are rented out to tenants already.
So with the total rental income from the other three units are $750 + $750 + $650 = $2150 per month, which more than covers my PITI payments.
I get to live in this property as a primary residence for free and have some extra cash flow every month. I’m very happy with this purchase.
Rental Property Investor · Fresno, CA · Member since 2017 · 12 posts · 15 votes
8y
@Jinhee Park Awesome! Congratulations Jinhee! I too did the same thing the exact same way in Fresno, CA a year ago now and couldn't be happier with the progressed I've made with my investing career. One thing I did for myself, which I highly recommend, is pay rent for the unit I lived in to myself. You can view it as savings, cash flow, or a $650 mortgage payment, doesn't matter. As long as your savings continues to build, preparing for the next purchase and keeping you ready for any unexpected repairs. Also, this wIll give you an indication of how the property will perform should you decide to move out when you fufill the FHA requirements. Best of luck to you!
Broker · Phoenix, AZ · Member since 2015 · 351 posts · 273 votes
8y
Great! Did you apply the current rents toward your income to qualify? I've been looking for a good FHA lender experienced with owner-occupied multi-family. Can I get the contact information?
Rental Property Investor · DFW, TX · Member since 2013 · 953 posts · 910 votes
8y
Congratulations @Jinhee Park. You should just be aware that the extra $500 each month can get eaten up pretty quickly with expenses especially on a 4-plex. Utilities are a big one and keep in mind that there is 4 of everything now so plan to save as much as the cash flow as you can to build up a reserve for when stuff breaks. But you can at least save the PM fee by managing yourself since you live there. Again, congrats, good luck
Rental Property Investor · Fresno, CA · Member since 2017 · 12 posts · 15 votes
8y
@Jinhee Park Awesome! Congratulations Jinhee! I too did the same thing the exact same way in Fresno, CA a year ago now and couldn't be happier with the progressed I've made with my investing career. One thing I did for myself, which I highly recommend, is pay rent for the unit I lived in to myself. You can view it as savings, cash flow, or a $650 mortgage payment, doesn't matter. As long as your savings continues to build, preparing for the next purchase and keeping you ready for any unexpected repairs. Also, this wIll give you an indication of how the property will perform should you decide to move out when you fufill the FHA requirements. Best of luck to you!
Tucson, AZ · Member since 2017 · 96 posts · 58 votes
8y
I concur with @Mark Rocha, I pay myself rent too in order to cover repairs, vacancy, utilities, PM (which I pay myself to do) and Cap-ex. This helps for when you move out (assuming you’re not living here forever) and helps you run it as a business. Congrats!!! Taking the first step is always difficult!
Cincinnati, OH · Member since 2017 · 66 posts · 28 votes
8y
@Jinhee Park Congrats. Way to stick with the deal. A lot of time seemed to have passed in your deal before you were able to close. At some point did you feel like the deal want going to go through and what was your motivation to keep pushing when you were faced with so many road blocks like the roof needing to be updated?
Flipper/Rehabber · Springfield, MA · Member since 2017 · 106 posts · 51 votes
8y
@Jinhee Park
Congrats ! What were the requirements to get the loan since you were self employed ? 2 years tax return ? And also what’s the minimum credit score you would need to qualify for the fha loan ?
Upland, CA · Member since 2015 · 18 posts · 20 votes
8y
Wow, all sounds good with the fha. I’m looking at a 3-plex corner building with a full 3 bedroom house and a separate duplex, nice property. It is 800k in Los Angeles,Ca. In this neighborhood, the house will rent for $3000 per month, the other 2 two bedroom duplex rents for $1100 and $1500, below market rate. Th total is $5600.
I was told that with. 3.5% down fha loan for 3-plex, Your mortgage payment has to equal 75% of the rents which would equal $4200. Is that a true fha rule? Would I not qualify for this because rents do not qualify me? My daughter and I will be doing this together. We both have over 700 fico midscores and very good incomes...She would be owner occupied ( she currently owns a conventional condo) and I would be the other non owner occupied owner( I own an fha home). Could all of this work with a 3.5% down? We don’t have the 20-25% down payment. Can someone give me info please?
Riverside, CA · Member since 2017 · 13 posts · 18 votes
8y
@Franklin Curry Jr If you know your “why” you can figure out how to make things work even if it takes some time. I’m planning on becoming financially free by next year so I did everything I could to make the deal work.
Riverside, CA · Member since 2017 · 13 posts · 18 votes
8y
@Pablo Ottenwalder Jr. You need to have at least 580 credit score and a steady source of income. I've been working as an independent contractor physician since Nov 2015 and had two years of income tax returns and had to submit recent pay stubs and bank account statements to qualify for the FHA loan. Good luck!
Tucson, AZ · Member since 2017 · 8 posts · 0 votes
8y
@Gina Williams Talk to as many mortgage brokers as possible to see if you can get a preapproval letter to submit an offer. If you get a NO from one mortgage broker, keep asking different ones until you get a YES to your specific situation. Local mortgage brokers are better than big banks. Good luck!