Considering 3 house purchase

[Ed Ventura]

I am considering moving my family down to pigeon forge and buying a lot that has 3 houses on it. We'd live in one and rent out the others as STR. the purchase price is going to be around $1.4 million. I have a lot of experience with STRs being a superhost for over 10 years and I believe I can bring in 200k for these houses combined.

Ho wwould you go about the financing for this deal? FHA 5 percent down? I don't have a lot of cash, could probably find 150k to put down.

Doe tthis qualify for a DSCR if on eof the homes is my primary?

[Malcomb Stapel]

@Ed Ventura the 5% FHA seems like it would fit your current cash situation pretty well. At $200k I'm guessing you would still cashflow even with such a small down payment.

[Tanner Lewis]

Hey Ed - this one wouldn't qualify with DSCR if one of the houses is your primary (assuming all are on the same tax parcel). If they are on different tax parcels, I will use DSCR for the non-primary deals and then FHA or UDSA (assuming it is rural) for the owner-occupied one.

[Ed Ventura]

Quote from @Tanner Lewis:

Hey Ed - this one wouldn't qualify with DSCR if one of the houses is your primary (assuming all are on the same tax parcel). If they are on different tax parcels, I will use DSCR for the non-primary deals and then FHA or UDSA (assuming it is rural) for the owner-occupied one.

Hmm, he said it's not possible to split them up, so I'm assuming they are all the same parcel. My issue is that I don't think I'd be able to qualify without the rental income on my own W-2. And my DTI definitely wouldn't qualify me.

[Raymond J. Rodrigues]

@Ed Ventura, if the property is not zoned as multi-family and has several dwellings on the property, it likely will not qualify for an FHA loan.

[Bryan Montross]

This is where you need to just start thinking outside the box. I don't know if any of these ideas will work, but maybe worth pursuing.

1. See if the Seller will finance with a minimal downpayment.
2. Check with some local banks in the area and tell them your plan. They might give you a portfolio loan on the property.
3. Rent out all units temporarily so you can qualify for a DSCR loan. Once you have income hitting your taxes you can refinance and move there.
4. Look for a private money lender that will finance some or all of the deal.
5. Partner with someone that has the cash. Give them a portion of the profits from the STRs and have a buy-out clause when you have the funds to refinance.

I am sure there are many other potential options for you to look into, but just off the top of my head these 5 came to mind. Best of luck.

[Ed Ventura]

Quote from @Bryan Montross:

This is where you need to just start thinking outside the box. I don't know if any of these ideas will work, but maybe worth pursuing.

 Thank you so much for these ideas. This is what I'm looking for. This is my first really big investment purchase, although I've airbnb for 15 years and rented another house that I have, but never to this scale. But this does get me thinking about creative ways to get this done. 

[Mike H.]

@Ed Ventura Its one of the most difficult issues when you get into property types like this.  Any time you have multiple homes on the same property, you're going to have problems getting financing.  I like one of the suggestions that bryan had in terms of buying and renting all three units out.  That might allow you to find financing.  And then move into one of the units later on.  Be careful of some of the lending requirements that may ask what your intention of the purchase is.  Some may have you sign something that say you don't intend to live there ever.  

But once you move in, I don't think you'll be able to ever refinance the thing. So keep that in mind when you get your loan.  A 5 year arm might be a bad idea in this case.  Get something you don't have to renew or refinance so you don't have to worry about it later.

Also, be sure that the property is zoned for STRs out there. Not every lot will allow you to STR even though sevier county and the city propers do have specific zoning that allows it so you don't have to worry about them ever rescinding that right.