Triplex financing options

[Nicholas Creahan]

Hey community. I have a deal I need some clarification on financing options. As it sits, it is a triplex with an oversized garage. Am I able to finance with VA/FHA while fixing up the garage and then at the year mark renting out the garage conversion with STR? I know there is an understanding having it be your primary residence. Thanks.

Nick

[Erik Browning]

Quote from @Nicholas Creahan:

Hey community. I have a deal I need some clarification on financing options. As it sits, it is a triplex with an oversized garage. Am I able to finance with VA/FHA while fixing up the garage and then at the year mark renting out the garage conversion with STR? I know there is an understanding having it be your primary residence. Thanks.

Nick

If you are a veteran or active duty (and some reservists), you can use a VA loan with 0% down payment. Additionally, you can either fix up the garage out of pocket with cash you have, or you can use a VA Renovation loan, which is my favorite. Here, check me out

If you are not a veteran/AD/reservist, you can use an FHA loan with 3.5% down. But here's the thing with an FHA loan with either 3 or 4 units (duplexes are excluded from this), you must pass what is called a "Self Sufficiency Test." From the guidelines: "Net Self-Sufficiency Rental Income is calculated by using the Appraiser's estimate of fair market rent from all units, including the unit the Borrower chooses for occupancy, and subtracting the greater of the Appraiser's estimate for vacancies and maintenance, or 25 percent of the fair market rent."

I have a calculator I made in the screenshot below as well as a shot from the guidelines. Let me know if you want a downloadable copy. It's tough to pass the Self Sufficiency test, but not impossible.

You can also do a renovation loan on an FHA - it's called a 203k loan.

As far as your STR question, yeah you can do it as long as you live in one of the units. For both FHA and VA. Go right ahead doing that, just make sure you live in the property.