Multifamily FHA loan question

[Kristen Crowe]

We're looking to buy a multifamily to use as an owner occupied LTR in the Long Beach, CA area. We currently own a successful STR and both work full time with a very decent income. Unfortunately we're not in the position of having 20% down. We were approved for an FHA loan for an owner occupied multifamily and can swing about 50k down today. We found a killer triplex with a gorgeous 3 bedroom 2 bath main house and a duplex in the back of the property both 1 bedroom 1 bath units. The owner is currently getting $2600 a month for the 2 units, which is about $600 less than market. Our loan stipulates 75% of the fair market rents MUST match/exceed the mortgage in order for us to qualify on anything larger than a duplex. I understand why, but I'm wondering if there is any type of work around or alternative here. If we were to move into this property today our mortgage would be around $4800 a month. Which means we would only need to pay $2200 a month to live in the front house. We make more than enough to comfortably afford this. I'm confident we could live there for a few years, rent the back two units for $1600-$1700 a month each and then get $2800-$2900 a month for the front house. We could easily be positive $700 monthly after all is said and done. If we get the rent appraisal back and they only allow us to use 75% of that we'll literally be short a couple hundred dollars, and miss out. Any suggestions would be great! We CAN come up with more down to get us closer, but we're trying to avoid completely draining savings and additional padding right now. Thank you!

P.S.  Comps are a bit tricky in this neighborhood.  I work in multifamily property management so I have a pretty solid grasp on what is realistic, but would like some insight on what an appraiser would look for.  Anyone have any good tools that you use to find accurate rental comps in the area or fair market value?  Thanks!

[Mary M.]

do you have any high price things you can sell? Cars, boats, horses ? If so maybe get selling :)

Also, maybe do the numbers with you living in the one bedroom and rent the main house.  That might get you closer to where you need to be.      

While  I understand this is a killer deal, using all available cash which would leave you with no reserves is a really really bad idea. Maybe look at your lifestyle (why so little savings??) and modify so you can start packing away savings so you can have enough for a downpayment and a years worth of expenses.