Multi family investing with an FHA in DC
Member since 2023 · 30 posts · 12 votes
Multi family investing with an FHA in DC
5 Replies
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2y
Quote from @Richard Pennington:
Young 24 year old getting into a federal job within a year and I wanted some clarity before I moved way ahead of time on using an FHA loan for a Mutli family home, duplex, or even a 4plex. I understand the market in DC,VA, & even Maryland may be rough but working there I may as well invest to obtain an asset to fully control. Im planning on using the 3.5% then adding on extra money with my down payment to cover for contingencies, closing costs, an ADU, plus extra to upgrade any aspect of the home to move forward to gain a percentage of some cash flow. If anyone has any insight on the DC housing market please connect with me. Im even willing to do a HELOC, jumbo payment, or an cash on cash refinance to make something work.
3-4 unit properties will have issue with FHA because of the self sufficientcy test. Youll want to use a conventional loan at 5% down on 3-4 unit properties.
District Invest Group545 Reviews - Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes2y
Quote from @Richard Pennington:
Young 24 year old getting into a federal job within a year and I wanted some clarity before I moved way ahead of time on using an FHA loan for a Mutli family home, duplex, or even a 4plex. I understand the market in DC,VA, & even Maryland may be rough but working there I may as well invest to obtain an asset to fully control. Im planning on using the 3.5% then adding on extra money with my down payment to cover for contingencies, closing costs, an ADU, plus extra to upgrade any aspect of the home to move forward to gain a percentage of some cash flow. If anyone has any insight on the DC housing market please connect with me. Im even willing to do a HELOC, jumbo payment, or an cash on cash refinance to make something work.
A few things to chew on 1. Multi family really only exists in D.C. proper in our region. 2. Multi family tends to be quite expensive for the most part usually north of a million (with the exception of few areas mainly around the fort totten area) 3. Even at that price point you are likely to to be in some pretty rough area’s. 4. The combo of rates plus prices makes multi family a struggle to cash flow. Now in the very long term 10-15 years they are likely to be good investments as basically no new multi family is being built. But I’d honestly just look at buying a single family or th under 600k and rentjng out the basement, you might end up with less negative cash flow and depending on how the city does potentially even better appreciation. If you have any other questions feel free to ask.
- Member since 2023 · 30 posts · 12 votes2yI just connected with a realtor and he mentioned that my lender would be more in tune with the FHA style of things plus that renting out the basement with a single family is pretty idealistic
Quote from @Jack Seiden:
Quote from @Richard Pennington:
Young 24 year old getting into a federal job within a year and I wanted some clarity before I moved way ahead of time on using an FHA loan for a Mutli family home, duplex, or even a 4plex. I understand the market in DC,VA, & even Maryland may be rough but working there I may as well invest to obtain an asset to fully control. Im planning on using the 3.5% then adding on extra money with my down payment to cover for contingencies, closing costs, an ADU, plus extra to upgrade any aspect of the home to move forward to gain a percentage of some cash flow. If anyone has any insight on the DC housing market please connect with me. Im even willing to do a HELOC, jumbo payment, or an cash on cash refinance to make something work.
A few things to chew on 1. Multi family really only exists in D.C. proper in our region. 2. Multi family tends to be quite expensive for the most part usually north of a million (with the exception of few areas mainly around the fort totten area) 3. Even at that price point you are likely to to be in some pretty rough area’s. 4. The combo of rates plus prices makes multi family a struggle to cash flow. Now in the very long term 10-15 years they are likely to be good investments as basically no new multi family is being built. But I’d honestly just look at buying a single family or th under 600k and rentjng out the basement, you might end up with less negative cash flow and depending on how the city does potentially even better appreciation. If you have any other questions feel free to ask.
- Member since 2023 · 30 posts · 12 votes2yConventional would be best in the VA & Maryland area as well ?
Quote from @Russell Brazil:
Quote from @Richard Pennington:
Young 24 year old getting into a federal job within a year and I wanted some clarity before I moved way ahead of time on using an FHA loan for a Mutli family home, duplex, or even a 4plex. I understand the market in DC,VA, & even Maryland may be rough but working there I may as well invest to obtain an asset to fully control. Im planning on using the 3.5% then adding on extra money with my down payment to cover for contingencies, closing costs, an ADU, plus extra to upgrade any aspect of the home to move forward to gain a percentage of some cash flow. If anyone has any insight on the DC housing market please connect with me. Im even willing to do a HELOC, jumbo payment, or an cash on cash refinance to make something work.
3-4 unit properties will have issue with FHA because of the self sufficientcy test. Youll want to use a conventional loan at 5% down on 3-4 unit properties.
- Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes2y
Quote from @Richard Pennington:
I just connected with a realtor and he mentioned that my lender would be more in tune with the FHA style of things plus that renting out the basement with a single family is pretty idealisticQuote from @Jack Seiden:
Quote from @Richard Pennington:
Young 24 year old getting into a federal job within a year and I wanted some clarity before I moved way ahead of time on using an FHA loan for a Mutli family home, duplex, or even a 4plex. I understand the market in DC,VA, & even Maryland may be rough but working there I may as well invest to obtain an asset to fully control. Im planning on using the 3.5% then adding on extra money with my down payment to cover for contingencies, closing costs, an ADU, plus extra to upgrade any aspect of the home to move forward to gain a percentage of some cash flow. If anyone has any insight on the DC housing market please connect with me. Im even willing to do a HELOC, jumbo payment, or an cash on cash refinance to make something work.
A few things to chew on 1. Multi family really only exists in D.C. proper in our region. 2. Multi family tends to be quite expensive for the most part usually north of a million (with the exception of few areas mainly around the fort totten area) 3. Even at that price point you are likely to to be in some pretty rough area’s. 4. The combo of rates plus prices makes multi family a struggle to cash flow. Now in the very long term 10-15 years they are likely to be good investments as basically no new multi family is being built. But I’d honestly just look at buying a single family or th under 600k and rentjng out the basement, you might end up with less negative cash flow and depending on how the city does potentially even better appreciation. If you have any other questions feel free to ask.
1st of all renting a basement in a single family house is done literally thousands upon thousand's of times a year in our market, so I don't really understand that logic, while obviously diffrent realtors have different opinions and different motives, I have found a number of realtor's seem to be stuck on strategies that worked quite well in a different market, diffrent rates profile and different time in the city, it is my personal opinion that for a variety of diffrent reason's the 3.5% down multi family route is not as effective as it once was or as other stratiges might be
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