FHA $1.25m Triplex in CA at 1.75% 30yr Fixed! First purchase!

[Ryan Brown]

Excited to share that I just closed on a newly remodeled Triplex as my first home purchase and 2 blocks from the beach! Passing the Self-sufficiency test on 3-4 unit properties with FHA financing is truly a nightmare.

Property: Triplex, new entire remodel from the studs just completed and vacant

- Unit 1: 3 bed 2 bath

- Unit 2: 1 bed 1 bath

- Unit 3: 1 bed 1 bath

Location: Long Beach, CA

Purchase Price: $1,250,000

Financing: FHA 1.75% fixed 30 year

- Down: 7%

For anyone that knows or has tried to finance a 3 – 4 unit property with FHA, the biggest roadblock is the Self-Sufficiency Test. I didn't even know this existed until the worst-case scenario occurred and the entire deal fell apart. Luckily, because this property is a new remodel and a beautiful location next to the beach, the appraised rental comp's were about 35% below market ($6200/month)! We went back to the appraiser for re-evaluation and they even exceeded the appraised rent rates we needed ($8500/month). Long story short, the PITI passed the self-sufficiency test by $20 (literally 20 dollars) and it took a 1.75% fixed interest rate to get us there!

I aged about 10 years through this process, but grateful we got it done. The amount I learned the hard-way through this volatile escrow process I feel as thought I could write a book!

If anyone is considering doing a FHA loan on a 3-4 unit property, especially in a high cost area, feel free to reach out to me for feedback/discussion as I just went through the real school of hard knocks, but came out with a great cash flowing property!