FHA SF purchase - How long before you can move out and rent it?

[Spenser Murphy]

I want to purchase a SF home to rent out. A conventional won't work at the moment. BP got me thinking about creative financing strategies to start investing. I can purchase a property with a FHA loan. Obviously, I'd have to live in the property to get FHA financing. How long do you have to occupy the property before you can move out and rent it out? Thanks.

[Jennifer Beadles]

@Spenser Murphy FHA loans require a minimum one year owner occupancy period. So you would need to live there for one year before you could move out and rent it. It's the same for any owner occupant loan, so a conventional loan would be the same. You do not have to refinance when you turn it into a rental, but you can only have one FHA loan at a time while you can have several conventional loans (so long as you qualify).

I suggest to clients who want to get started in investing and can qualify for a loan though have a limited down payment to owner occupy a duplex or triplex. If you buy right the rents on the other side should cover a majority of the monthly mortgage payment and when you move out you'll get much higher cash flow and have two or three units instead of one.