Newbie - All advice welcome on possible deal.

[Steve Cheslock]

Hello, 

I'm going to be a first time home owner and planning on purchasing soon. Based on my income I am pre-approved for an FHA loan of $325K. Mortgage broker at the bank said he can get me a standard 203K loan and therefore I have a lot of options. My personal feeling is that I'd prefer to take advantage of this opportunity and centralize my focus on a fixer up over something more turn key because my ceiling for building in equity would be higher (with the right deal of course).

For some baseline knowledge I'm currently single/no kids and my goal is to live in this residence only to fulfill the FHA loan requirement. After reaching the necessary time I plan on moving to something smaller and using this property as an investment property. I live in a very expensive market where a normal 3/2 on .25 acres is probably $325K-$350K. This area appreciates well and 3/2 rentals can usually command anywhere from $2200-$2800/mo.

Taking a look on the MLS I see a 3/2 that "is in need of remodeling or tear down" listed for $250K, and has been on the market for 6 months. What is important to note is the property located in a multifamily zone (up to 3 units for lot size), I called the zoning office to confirm. I'm thinking I can probably get the property as is for $220K, which would leave me with $110K to play with if I wanted. I would personally love to take advantage of the multi-family zoning and the eventual goal would be to add units. But I highly doubt $110K would be enough to add even one unit and fix up the existing residence.

I know there are probably a lot of details I'm leaving out but I'm curious how others with more experience would approach this.  Should I just buy the property now, fix up the residence that is there and worry about the other units later?  Knowing that my goal is to eventually add units is there anything I should be taking into account if I do plan to just fix up the current residence at this time?  Any outside the box ideas on how I can maybe swing fixing up the house and adding on a unit at the same time?  Any other thoughts I am completely missing?  

Like I mentioned I'm new at this so any feedback is appreciated.  Also please don't hold back on any criticism, I'm here to learn and my feelings won't be hurt if I'm told my thinking is way off base.  

Thanks in advance.