They would need to take second position if you get a lender involved.I would get the occupancy rate up to around 60% by year 3 and then put on the market for $11mm.

Don't expect anything greater than ZERO occupancy.

.📍 Market Snapshot (Fall 2025)Occupancy: We're maintaining 95–96% occupancy across our residential portfolio (SFRs, duplexes, small multis).Rent Growth: Up roughly 4–4.5% YOY, but the pace has definitely slowed since the 2022–2023 surge.Hot Spots: Overland Park and Lenexa remain strong.

Quote from @Chris Kersey: Lenny, A tenant move out or move in is grounds for a change in occupancy, meaning you shouldn't have to pay any early termination fees. 

.- These occupants may strip the property when they leave!

Beyond the HOA fees, there's often a misalignment of interest between the landlord and owner occupant member of the HOA.

The purchase price is $6M.Equity: $800k–$1.2M (I already have $400k contingent on tax returns from one investor)Seller Financing: Balance (~$4.8M–$5.2M) at 6% interest-only, 5-year balloonInvestor Terms: Offering 8% preferred return + equity participationRevenue has averaged ~$750k–$800k annually over the last few years.Expenses run about $300k per year.Normalized NOI: $450k–$480k.At current occupancy (~40–45%), cash flow is thin.

On the lending side, here’s what I’d look at:Coverage: Your current numbers put you around a 1.3 DSCR, which is fine, but it doesn’t take much of a dip in occupancy before that gets tight.

Think of it as “buying down” a better cash-flow position.Refi Timing & FHA StrategyYou’re right that FHA requires 12 months of occupancy, so realistically you’re looking at a refi into conventional after year one.If you want another FHA in year two, your only path is to stay in this one, refi to conventional after 12 months, and then use FHA again.Keep in mind: refis aren’t free.

Quote from @Jules Aton: Great to hear the occupants actually left without drama.