Is this BRRRR FHA Strategy any good?

Question

Plan Overview:

I would like to preface by saying I am new to real estate investing and do not own anything yet, however after diligently listening I believe i have a plan. I would really appreciate any advice or critique as my main concern was the chronological structuring and also if anyone knew the time table of refinancing a FHA loan even after repairs) If anyone experienced has any insight to refining this plan, I greatly appreciate it!

Plan Overview:

Get FHA loan for 3.5%

Renovate

After a year,  Refinance to a conventional 30yr fixed loan to get lower interest rate, and get access to equity + remove MIP. (Example: buy house for 250k, put 25k into rehab, ARV is 320k

estimated return after repair ~45k + whatever equity we have after a year)?

After a year cont'd,

Look for new duplex to move into and repeat the process however using only a % of the intial properties equity for downpayment (the other % goes to a 20% down payment on a non primary residence investment loan)

From my understanding, since the initial FHA was refinanced to a conventional loan, I should have no issues getting the second FHA loan(or try 5% down conventional loan if thats more beneficial)

Joe Norman · Answer

This is definitely possible, and there are some potential pitfalls to watch out for. For one, refining in a year may not get you a better rate, even if you're going from FHA to Conventional. Second, you may not get the homeowner rates if it looks like you're trying to stack up investment properties, you may need to show cause for why you're buying a new home in the same area (if you're moving out of the area for your second home this is less likely to be an issue).

I suggest talking through this with a few local mortgage bankers. Not big national lenders, but local bankers in your area. Good luck!