Multi-Family Investing Strategy Question

[Robbie Shiver]

Hi all - new to the forum...  I am looking to purchase a four unit multi-family in Atlanta.  I will be financing it but I would like to move my mother down to Atlanta as she is getting older and would like to be closer to me.  I would like to use an FHA loan and have one of the units be my mother's primary residence while renting out the other four units.

My question is what would be the best way to go about this.  My mother owns a home and the properties I own are under a separate LLC.  Would making another LLC with my mother in it allow me to get the FHA loan and have her be the primary resident for one of the units?  Obviously I'd like to avoid purchasing the property in my name and would prefer to be covered under an LLC.

Any suggestions?  Thanks so much!

[Jacob St. Martin]

Hello Robbie, this is a great question! First, you will not be able to get an FHA loan under an LLC because they are designed as primary residence loans not investment loans. The home will have to be in the name of someone who is occupying the property in order for it to be an FHA. From your post it sounds like you are not planning on living in this property but your mother would be, which means it will have to be in her name. If she can't qualify on her own then you can cosign for her. There is the option of transferring the property into an LLC after the purchase however this technically triggers the due on sale clause in your mortgage so there is a risk of the bank calling the note and I would not recommend this.

[Michael Dumler]

@Robbie Shiver, you cannot purchase a small multifamily using an FHA-insured loan and not live in the property, you'd be committing mortgage fraud in this case. You can get an FHA-insured mortgage under an LLC but there are many restrictions/regulations involved. Again, one of which would be that you have to move in within 60 days of purchase and live in the property for up to a year. Even with your mom as a memebr of the LLC, I still believe this would not be allowed. Moving forward, you'll need to look into other loan products to satisfy the purchase and investment strategy. Could you sell your mom's current residencence and have the FHA loan be in her name?

[Steven Foster Wilson]

Quote from @Robbie Shiver:
Hi all - new to the forum...  I am looking to purchase a four unit multi-family in Atlanta.  I will be financing it but I would like to move my mother down to Atlanta as she is getting older and would like to be closer to me.  I would like to use an FHA loan and have one of the units be my mother's primary residence while renting out the other four units.

My question is what would be the best way to go about this.  My mother owns a home and the properties I own are under a separate LLC.  Would making another LLC with my mother in it allow me to get the FHA loan and have her be the primary resident for one of the units?  Obviously I'd like to avoid purchasing the property in my name and would prefer to be covered under an LLC.

Any suggestions?  Thanks so much!

 Hi Robbie,

I like your heart for wanting to help your mom. I too have been helping my parents in RE. What I like to do is call as many banks as I can. When I am looking to buy or refinance a property I will often call 10-20 if not more a week. I have found some incredible loan options by doing this. If I were you I would call local brokerages and ask them what banks and loan products they are using. 

[Robbie Shiver]

Quote from @Michael Dumler:

@Robbie Shiver, you cannot purchase a small multifamily using an FHA-insured loan and not live in the property, you'd be committing mortgage fraud in this case. You can get an FHA-insured mortgage under an LLC but there are many restrictions/regulations involved. Again, one of which would be that you have to move in within 60 days of purchase and live in the property for up to a year. Even with your mom as a memebr of the LLC, I still believe this would not be allowed. Moving forward, you'll need to look into other loan products to satisfy the purchase and investment strategy. Could you sell your mom's current residencence and have the FHA loan be in her name?

Thanks for the feedback.  My mom is working on moving out in order to rent her house as she currently lives in an area that can return great rental value for her home.  She is looking to downsize to an apartment that would fit her needs better and I will run all aspects of the property management and rental for her so she can just collect the check :)

Seems like the best route for the multi-family if I wanted to go for an FHA would be to cosign with her as I currently down own any properties outside of my LLC.

[Drew Sygit]

FHA loans are only made to people not LLCs.