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Updated over 9 years ago on . Most recent reply
![Rita Temple's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/230943/1660002652-avatar-temple1612.jpg?twic=v1/output=image/crop=818x818@365x681/cover=128x128&v=2)
FHA Loan and flipping first house
So please correct me if I'm wrong. But, I have to reside in the house for a year if it is a FHA loan? What if I was to find a house and use the FHA plus 203k loan, then once I'm ready to sell convert to a conventional loan within 6 months of living there. Or would I only be allowed to convert to a conventional loan after living there for a year?
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![Ed Caldwell's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/123437/1621417918-avatar-edcaldwell.jpg?twic=v1/output=image/cover=128x128&v=2)
Hi Rita,
If you can qualify for a low interest FHA loan, I would not waste it on trying to flip a property. With a FHA loan you can buy up to a 4 unit property in most states as it qualifies as a residential loan. In a fourplex, you could live in one unit for a year and rent the other 3 and once your year is up rent the fourth unit and probably live there for free and bank the savings to put toward flipping going forward. FHA loans are ideal for cash flow properties if you can qualify for one as your first property. You could even turn this into a medium term flip and sell it after a few years by increasing rents and fixing them up over time. If you are set on flipping properties, it is very cash intensive as you have to pay cash to get a great deal. In these cases, you have to use personal funds/loans or hard money loans to close fast and you have to have the infrastructure in place to flip fast to keep the holding costs down. That means having a reliable contractor and marketing/good Realtor in place to turn the property.
I have used hard money in the past and you have to be confident in your market that you can fix and sell it within a couple of months or the hard money interest will eat all your profits away the longer you hold. Make sure you research areas you want to flip in to make sure there is adequate demand/sellers in the price point you are going to buy and market in.
I hope this helps.