Owner Occupy purchase Multi-family with FHA

[Gary Wright]

I have my sights on multi-family props in the San Diego area. When FHA says owner occupied, does that mean one of the units has to be a primary home? Can I use one of the units for a year as a commuter residence (live there 4 days a week) and quality?

Second question:  If all the units are occupied, is there a way to encourage a tenant to leave (evict)?  I'm not finding any so far that have a unit empty?

Thanks for he advice.

[Kevin Fox]

Hey @Gary Wright

First, I just want to say that it is incredibly wise to have your sights set on multi-family properties.  Generally speaking, they tend to present the best opportunities for buy & hold investments in our market and are a FANTASTIC way to begin building your portfolio.

As for your questions:

The FHA's owner-occupancy (OO) requirement does stipulate that the buyer must reside in the property (or one if its units) as their primary residence. It may vary between different lenders, but technically what qualifies as your primary residence is merely the home you live in for the majority of the year (4/7 days a week should satisfy that requirement), There are some nuances to this rule, I'm sure, so be sure to speak with a lender who has a lot of experience with FHA. Do you have a loan broker assisting you map out the logistics of everything? Happy to recommend a great one, if not.

To answer your second question, yes. There are a few different ways to encourage tenants to vacate once you have ownership of the home, but that likely will not be the best route given your particular circumstance. Another stipulation of the FHA's OO requirement is that the owner must take occupancy within 60 days after closing, so you want to avoid putting yourself in a situation where you are unable to do so. There are a few different ways to go about either 1. getting the existing tenants out a little more constructively (and much less risky/problematic for you) prior to closing or 2. finding properties that have already been vacated.

Feel free to send me a PM (private message) if you have any other questions or would like to discuss this further.