Renting out current house and buying duplex with FHA

5 Replies

Hi Bigger Pockets Community,

I currently own a single family home in CT where I live with my fiance. We have been wanting to get into investing for a while and finally settled on BRRRR to build passive income.

I cannot sell my current home because I just refinanced to a 30 year fixed rate conventional mortgage and must hold the loan for at least 6 months. We have been looking at duplexes in a near by city that cost $400k-$500k. We do not have enough money to put the required 15% down for a conventional mortgage so we were thinking my fiance could apply for an FHA loan and I would be the co-borrower. Then we would move into one level of the duplex and live there for a year while we renovate it. We would also rent out the single family home we are currently living in. After a year we would refinance the duplex to get more cash for a down payment and then repeat the process.

Please let me know if I over looked anything. Is it better to take a home equity loan on my current house to get the cash for the down payment and apply for a conventional mortgage? Can I be a co-borrower on an FHA loan if I already own a home?

Also looking for realtor in New Haven County who understands BRRRR :)

Thank you!

Have you ran the numbers for the current SFH you just refinanced? Assuming it cash-flows nicely you have a solid plan. Half a mill for a duplex? Multi-family is out of control.

The real issue is building a safety net. If you don't have adequate reserves for each property you're walking on thin ice. Most lenders require 3-6 months anyways so that could become a road block. This is true for investors using conventional financing. 

Hi @Krista Pereira ! (Are we related?!)

Welcome to bigger pockets! Does your fiance have a mortgage currently? If so, that could be an obstacle in the plan here. 

Sounds like you may be looking in the West Hartford, Connecticut area at those price points. The market is a bit nuts lately. 

I probably wouldn't make you the co-borrower unless your fiance absolutely needs you to be in order to qualify. 

Glad that you are exploring opportunities in the real estate realm, Krista!

Best of luck on finding the right financing solutions for you and your fiance. 

When that is set, the first steps I would recommend as a new investor is to get a handle on analyzing the income, expenses and ROI of these properties in Bridgeport.

You can use the Bigger Pockets calculators to start. Use Zillow and rentometer.com to get data and analyze a few from your home to see what type if returns there are.

If these meet your investment criteria then start looking in person.

Let me know if you have any questions.

- Craig

Thanks everyone for the input :) I think in this scenario I was forgetting the most important part of BRRRR, buying below market value! The duplexes I was looking at were in New Haven and although they require some cosmetic upgrades they are still priced high along with everything else in that market

I actually decided to take a different approach, we put in offer in on a condo that requires some rehab and is listed well below market value because it's a short sale. We are able to offer all cash and would plan to refinance it after the renovation. Fingers crossed that the offer is accepted! If we close on the sale I will be sure to provide a breakdown of the numbers :)