FHA Loan on First Los Angeles Purchase

[Alex Ballesteros]

Im on the verge of purchasing my first investment property here in Los Angeles, and I will be applying for an FHA loan, rehab the house (mostly cosmetically) and maybe add an ADU if possible, and live there until i reach 20% on my mortgage, refinance out of the FHA into a conventional loan, and then look for my next deal & repeat this process over and over again.

My goal is to build my portfolio in this manner and buy at least 1 door every 2 years here in Los Angeles. I would like to see if anyone has any thoughts on this process, or recommendations any other strategies? Any insight or tips would be appreciated.

[Charles Renn]

Hi @Alex Ballesteros,

You have the right idea. Not knowing the specifics of your situation the only thing I can add is to consider looking at 2 unit properties vs. adding an ADU. Perhaps you know this already, but with duplexes, your lender considers the additional rent from the 2nd unit to increase your purchase power. Rather than build/convert an ADU, you can mortgage the higher purchase price and save capital for renovations. Hope this helps!