Trying to go from FHA to BRRRR

[Nicolas Sanhueza]

Quick question, I am looking to buy a small multi family with a FHA loan and house hack.
is it possible to force appreciation through a rehab and then cash out refinance to a conventional loan?

I would still live in the property for at least 24 months.
Thank you!
PS: I am looking to buy in Willow Grove, PA

[Paul Welden]

@Nicolas Sanhueza

YES! Absolutely yes! 

FHA 203k will allow you to include the purchase $$$ + rehab $$$ into 1 single close loan.

FHA 203k also requires you to intend to occupy the property as your primary residence for a min of 1 year.

I recommend to occupy it as your primary residence for 2 years during the 5 year period prior to selling to qualify for tax exempt profits. I know you said you would occupy it for 24 months. So, read up on IRS Topic 701.

As soon as the rehab is completed or 6 months after closing on the 203k, whichever is later, and the ARV is still favorable, definitely do a refi into a conventional loan.

Cashout refi will usually only go to max 80% LTV of the property's current value.

Example:
Purchase $100k + $50k rehab = $150k loan
ARV $250k
Cashout refi loan will be $200k (max 80% of $250k)
Payoff the existing $150k loan and you're left with $50k cash

Hope this helps!