Does it make sense to buy a duplex using FHA loan and rent out 1?

5 Replies

Hello fellow investors. I am new to real estate and I had a question about buying a duplex. My current income range is low to moderate. There's a 90% chance that I can get qualify for FHA loan. Do you'll think it would be a good idea if I buy a duplex and rent one out and self occupy the other. Would FHA allow me to do that? My long term goal is to creat a steady cash flow through rental properties. I am open to any and all kind of suggestions. Thank you in advance for your input.

@Dawal Limbachia . Exactly what I’ve done and was able to beat out an all cash investor in a competitive market. Was able to slowly update both units and increase rent by +$500 a month for the unit that is tenant occupied. Great way to leverage your 3.5% down. Then when you’ve built enough equity refinance to pull out enough for a down payment for your next investment.

Originally posted by @Dawal Limbachia :

Hello fellow investors. I am new to real estate and I had a question about buying a duplex. My current income range is low to moderate. There's a 90% chance that I can get qualify for FHA loan. Do you'll think it would be a good idea if I buy a duplex and rent one out and self occupy the other. Would FHA allow me to do that? My long term goal is to creat a steady cash flow through rental properties. I am open to any and all kind of suggestions. Thank you in advance for your input.

House hacking is your first step into real estate. Try to get a 4 unit, but settle for 2 or 3 and let the tenants pay your mortgage. Keep putting money aside as if you're paying the mortgage so you have a down payment for the next one. What's even better if the first one you use FHA (use the 203K to renovate the house on the bank's dime) and then use 5% down Fannie Mae for the second one and then start doing conventional loans until they tell you you can't have any more.

Yes, you can definitely do that. I would recommend trying to find a 3 or 4-plex if you can afford it though. That way if a renter moves out you won't lose all of your rental income. In a year purchase another one and move into that one. It's a really good way to get started fast. Good luck!

FHA for multi, absolutely, but I would recommend 3 or 4 units. I have house hacked 2 fha financed properties, they both are 3 units and in my experience, 1 unit pays the mortgage(or most), the 2nd unit covers utilities and the final unit is cheap or free living. Down the road when you move out that 3rd unit is where the profit is. Buying a duplex leaves the math too tight to really be worth it.. If I can help at all definitely feel free to reach out!