How to go from a FHA property to commercial property as a self employed investor.

[Barbara Arroyo Resto]

Hello, everyone in BP. Im gathering some information to have a better understanding with a FHA Loan for my first house hacking multi family property, and how to convert into conventional loan or commercial loan . I am self employed , Uber driver. This is why I'm taking the route of a FHA loan since the flexibility on approval for self employed investors .Can I open an LLC to manage this 4 unit property ,so tenants can make payments to my LLC? My goal is commercial REI .

Im just not sure how to get into my 2nd investment to commercial multi unit property as a self employed. Does creating an LLC for managing the first investment property will be favorable for me as far as getting approved by a lender for a comercial loan investment 5+ units?

[Simon Ashbaugh]

Hey Barbara, starting with an FHA loan for your first multi-unit property is a good choice but converting it to a commercial loan later may be challenging. This depends on the lender's policies, the property value and your overall financial situation.

Being self-employed can make securing commercial loans more complex as lenders typically prefer borrowers with stable income and strong credit history. However, with careful planning and preparation, obtaining financing is still possible.

Keep in mind that setting up an LLC for your rental property won't directly impact your loan eligibility, but the experience you gain demonstrates valuable skills for commercial real estate investment. These skills such as responsible budgeting, effective tenant management and property maintenance showcase your ability to handle larger and more complex properties which can strengthen your application for a commercial loan in the future.

It's important to do your own research and understand the different loan options and their terms before you make a decision. Consult with a mortgage broker specializing in working with self-employed borrowers, this can only be beneficial to you. Hope this helps!