203K FHA BRRRR combo

[Tyler Goulden]

As I have said in previous posts I want to focus on larger commercial properties. However I still want to start off with one 4plex to house hack. I was wondering if you can BRRRR with a 203K loan. I would like to get into my first 4plex with a 203K loan, and then I was wondering if I can cash out refinance....and then take that money, and open an FHA loan to get to a second property relatively quickly? I just don't know if I can legally live outside the property after the refi since a 203k loan is an owner occupied? I also didn't know if I can open a second owner occupied loan (FHA) after the REFI since you can only have one of those loans at a time. If this strategy is legal I'd like to get two 4plexes this year and then start saving aggressively to get into 16+ unit apartments within the next 3 years. Thanks to everyone in advanced!

-Tyler

[Joshua Manning]

@Tyler Goulden I have been doing some extensive research into this strategy myself. I want to attempt to do this but from what I've heard it has never been done successfully lol. In my own research I have found that you can refinance from one FHA loan t another and even better they will give you a 85% LTV rate on the cash out refinance, however there is a catch. You will have to live in the property for at least a year, and you have to have sufficient equity into the property as well. I have also seen where it has been said that FHA loans can not be refinance with a cash out if the property is an investment property. However I'm not sure if the bank will still classify the property as an investment property if you are house hacking it, and using it as your primary residence. I think a loan officer would be the best one to consult on that. I also think an FHA 203k loan brings its own special set of problems with it, but honestly I could be totally wrong on that part. But in any case if you plan to refinance with a FHA loan, you will need a sufficient amount of equity in the property before doing so. Because of that I would suggest putting a down payment down that is larger than the 3.5% required.

Right now I've begun looking into conventional loans to do a cash out refinanced with. They have a shorter seasoning period, but also a lower LTV value as well, but their guidelines for a cash out refinance are less strict and cheaper too.

In any case @Gary J. is right though, it is definitely possible, but in order to pull it off it seems you need to have a very careful and precise plan. And there seems to be little room for error as well.

My question now is...

1. Can you purchase a house with FHA 203k loan and cash out refinance with a Conventional loan?

And if so what guidelines would apply to such a strategy?

2. Can you convince the bank to not count a 4 Plex as an investment property if you are living in one of the units as your primary residence?