How To Buy A Multi Family Property With FHA Loan - The One Thing You Need To Know
How To Buy A Multi Family Property With FHA Loan
Make sure that you let your lender know
Always make sure when you talk to your lender, you let them know that you want to do an FHA loan but you want to buy a multi-family property with the loan. One of the requirements is you must occupy the property; you have to live in the property as your primary residence.
Asked Your Realtor to Help You Find a Property
You can ask your realtor to help you find a property in your area, they would send you out a list of these properties and you would decide which one is best for you. Keep in mind that sometimes these properties do need some work.
If you wanted to buy a multi family property (three units) and it cost $210,000 you can decide based on whatever is happening with the property what you want to offer. Let say you want to go in and offer $210,000, you’re going to put down 3.5% and you are going to go through the process and make sure that your loan is approved and you own the property. Each of those properties gets $650 in rent per month, which would be about 1950 that you can expect to receive monthly if you are not living in the property. But since you are residing in that property, there are some steps that have to follow.
· You have to make sure that one of those properties is vacant so that you can move in, that’s the only way you can qualify with an FHA loan.
· You have to make sure that you have tenants on the property. If there are no tenants before you move in, you’re going to draw up leases and make sure you’re comfortable with being someone’s landlord and then finding tenants through social media or craigslist so they can move in to the property and they will be your neighbors.
The good thing in buying income property is now that you are able to use that potential income to qualify you for that property. You can use up to 75% of the income to qualify and they will use that and process everything together as if you would have full tenant occupancy in that property
So remember, FHA loan, 3.5% down and you can buy up to a four-unit property. You have to live on one of those units and you can use the rest of the income that is coming into the property to qualify you for the loan. After 12 months, you can actually move out of this property and put another tenant in that property that you were staying in and now you have a full property as investment income. If you are paying $1,500 per month on this property and you’re going to be making almost $2,000 per month in rental income, that $500 that you can use to invest somewhere else or use that money to qualify for something else.
There are so many options out there, the bigger the space is, the more people you can put inside that place and the more you can charge for rent. Make sure you make the best decision for you whatever the amount of investment income you want to come up with , but if they are paying your mortgage you’re good.