Real Estate Investor · Sacramento · Member since 2015 · 20 posts · 4 votes
I'm analyzing an opportunity to buy two duplexes on the same lot in Los Angeles. I know that all four units are tenant occupied, two of which are renting far below market rent. I'm trying to figure out my options to finance this property using an FHA loan. Ideally, I would move into one of the units. I've read a few other posts on BP around this topic and the best suggestion I've seen thus far is try and negotiate with the seller to have them buy out one of the tenants so that I can move in and obtain FHA financing. If anyone has any other suggestions I'd love to hear them!
Also, assuming this is the best option and the route I plan to go: The seller wants to see that I have financing lined up before I view the inside of the units, so do you have any suggestions around how to move forward considering my financing would be contingent upon the fact that I live in one of the units?
Rockledge, FL · Member since 2016 · 493 posts · 427 votes
9y
Kyle,
If they are on leases, then you can always non-renew a lease. If the tenants are all equally good, obviously non-renew the below market rent ones. You might be able to hold closing after one of those leases expire, but that gets tricky. Other than those options, the buyout could work.
Go see a couple of lenders and get Pre-APPROVED, not pre-qualified. You will need to tell the lenders what you want to do, and they should be able help you through. Hopefully the pre-approval will satisfy the seller. You may need some paperwork from the seller to make it happen... but if they want to sell, they should be willing to help.
Rental Property Investor · Boston, MA · Member since 2015 · 9 posts · 3 votes
9y
I bought a duplex in LA with an FHA loan. Get a lender to pre-approve you; they really do take care of everything for you. One note - FHA loans in LA are usually the last offers to get accepted. I made offers on several properties and lost out to all cash, no contingency offers from cash-rich LA investors. To get the place I bought, I had to offer way above asking and not make any contingencies. Forcing the seller to make one of the units vacant might take you out of the running, depending on what other offers the seller has on the table. Ask to see the leases and see when they are up, or if any of them are month to month. You have some time (I think 90 days) after you buy the place to move in to still be compliant with FHA regulations. Good luck!