Trying to buy a multi-unit with an FHA loan..
Pittsburgh, PA · Member since 2017 · 44 posts · 17 votes
I looked into an FHA loan it's a ton of paperwork. I got all my finances in line and the day after getting the FHA approval the Quad I wanted was under contract. Pretty much 100% waste of my time and the gouge I took to my credit score.
If I looked at 'failed deals' this way, I would be nowhere. If, as you say, it was '100% waste' of time, then you didn't learn anything. I would ask, 'why didn't you place an offer on the Quad subject to getting FHA loan approval?' That would seem prudent. That is a common scenario. Did you learn that maybe that is an alternative to your approach? If so, your experience wasn't a waste of time.
I've also learned that failure is common in this business. I fail all the time. But I win some too. Sometimes I fail over and over before I achieve success. I learned that discipline from Mel Madden a long time ago (paraphrased): The key is to step back and not look at events as '100% waste' of time, but part of the earning experience as you travel on the path to your destination.
Assuming you are referring to 5 or greater units, then the answer is no. The best you can do is 83.3% for market rate properties. Also, keep in mind that there are scores of additional (expensive) fees and a very long application process. See various sites and lenders that talk about FHA 223F mortgages: https://www.hud.loans/fha-223f/
4 units or less is a different story...
I looked into an FHA loan it's a ton of paperwork. I got all my finances in line and the day after getting the FHA approval the Quad I wanted was under contract. Pretty much 100% waste of my time and the gouge I took to my credit score.
I looked into an FHA loan it's a ton of paperwork. I got all my finances in line and the day after getting the FHA approval the Quad I wanted was under contract. Pretty much 100% waste of my time and the gouge I took to my credit score.
If I looked at 'failed deals' this way, I would be nowhere. If, as you say, it was '100% waste' of time, then you didn't learn anything. I would ask, 'why didn't you place an offer on the Quad subject to getting FHA loan approval?' That would seem prudent. That is a common scenario. Did you learn that maybe that is an alternative to your approach? If so, your experience wasn't a waste of time.
I've also learned that failure is common in this business. I fail all the time. But I win some too. Sometimes I fail over and over before I achieve success. I learned that discipline from Mel Madden a long time ago (paraphrased): The key is to step back and not look at events as '100% waste' of time, but part of the earning experience as you travel on the path to your destination.
I looked into an FHA loan it's a ton of paperwork. I got all my finances in line and the day after getting the FHA approval the Quad I wanted was under contract. Pretty much 100% waste of my time and the gouge I took to my credit score.
If I looked at 'failed deals' this way, I would be nowhere. If, as you say, it was '100% waste' of time, then you didn't learn anything. I would ask, 'why didn't you place an offer on the Quad subject to getting FHA loan approval?' That would seem prudent. That is a common scenario. Did you learn that maybe that is an alternative to your approach? If so, your experience wasn't a waste of time.
I've also learned that failure is common in this business. I fail all the time. But I win some too. Sometimes I fail over and over before I achieve success. I learned that discipline from Mel Madden a long time ago (paraphrased): The key is to step back and not look at events as '100% waste' of time, but part of the earning experience as you travel on the path to your destination.
My thought process was get bank backing before I make any offers. I see this ethical way of thinking is “incorrect”. You should just make offers with the contingency of getting the actual funds to back your big mouth offer. To me that’s a hollow offer, I would want to see that the “buyer” has the funds before putting the property under contract but then again I like to be a man of my word. With this way of doing business we might have avoided the collapse of 2008 all together.
I do retract my previous statement saying it was “100% waste of my time”. I did learn that you have to make offers or you will lose the property, even if you don’t have the means to do so. It’s a lesson I learned the hard way. I lost my dream property because I wanted to make sure I could follow through with the contract. This loss makes me more hungry for the next deal I can get, I see now it’s a dog eat dog world in the real estate game.
My angst wasn’t at Chris but more so over the other investor that stole the property I wanted but after reading it I can see how someone could get that impression. I harbor no hatred toward anyone on BP. You guys have been more than helpful and very kind.
I see now that making offers with that kind of contingency is the norm, I don’t like doing business that way. Unfortunately me going the extra mile, hindered not helped me.
Back to the OP… the FHA loan I applied for I needed to have at least 3.5% down payment to even start the paperwork, Which in hindsight should have been done after making the offer. You can only go from 2-4 units anymore and I would need a Fannie May loan or commercial loan.
Technically yes you can get it for 100% no money down.
that 3.5% downpayment/any closing costs can come as a gift from a family or friend.
My angst wasn’t at Chris but more so over the other investor that stole the property I wanted but after reading it I can see how someone could get that impression. I harbor no hatred toward anyone on BP. You guys have been more than helpful and very kind.
I see now that making offers with that kind of contingency is the norm, I don’t like doing business that way. Unfortunately me going the extra mile, hindered not helped me.
Back to the OP… the FHA loan I applied for I needed to have at least 3.5% down payment to even start the paperwork, Which in hindsight should have been done after making the offer. You can only go from 2-4 units anymore and I would need a Fannie May loan or commercial loan.
You're blaming everyone but yourself. The other investor had his financing lined up and his contract worded to his liking so that when he saw something he liked he could pull the trigger. When you go hunt, you don't find the deer then load your rifle. You make a plan, load your rifle, and you head out ready to capitalize on an opportunity.
I’m not blaming anyone but myself. I 100% take blame for missing the opportunity
You’re analogy isn’t correct.
I wanted to make sure I had my rifle loaded before I went hunting. The gripe I have is this investor didn’t have any ammo and is holding the deer captive until he has the resources to buy the ammo to shoot the deer. I’m cocked locked and ready to rock, that’s my only issue.
Just to be clear, you don't need to put any money out before you start the paperwork but you do need to show you have the downpayment and closing costs in a bank account.
Rather than bash the "other investor that stole the property" (because they really didn't steal anything) please sit down with a decent loan originator in your area (or go to the marketplace and advertise for one) who can review your situation and give you an idea of what you can and can't qualify for.
You're right, you should be a man of your word and the knowledge of what you can and can't buy will help you be that guy.
Stephanie
How do you know the other investor "didn't have any ammo and is holding the deer captive until he has the resources to buy the ammo to shoot the deer." He may have already spoken to his lender/partner, knew his limitations, saw an opportunity and took action. That's the way this works.
Unfortunately, you were the one that wasn't prepared to buy and you weren't protected with a financing contingency which, in this world, is a prudent business practice. The only reason to not have one is if you're a cash buyer and you've already done a comparative market survey so you feel comfortable with the purchase price and you've done a property inspection to give you an idea of any repairs or deficiencies that exist. Take the prequalification process to its logical conclusion and you're qualified, but the lender doesn't like the property for some reason. What if the appraisal comes in way low. Are you still going to buy that house? Most people would/could not and the financing contingency would allow them to get out of the contract.
Please don't take this wrong and I truly don't mean to bash you, but I feel you're not listening to the wealth of knowledge on this thread, you're clouded by something that happened that was totally avoidable with just a little due diligence on your part. Let it go and go get another one. Lots of deals out there.
Stephanie
How do you know the other investor "didn't have any ammo and is holding the deer captive until he has the resources to buy the ammo to shoot the deer." He may have already spoken to his lender/partner, knew his limitations, saw an opportunity and took action. That's the way this works.
Unfortunately, you were the one that wasn't prepared to buy and you weren't protected with a financing contingency which, in this world, is a prudent business practice. The only reason to not have one is if you're a cash buyer and you've already done a comparative market survey so you feel comfortable with the purchase price and you've done a property inspection to give you an idea of any repairs or deficiencies that exist. Take the prequalification process to its logical conclusion and you're qualified, but the lender doesn't like the property for some reason. What if the appraisal comes in way low. Are you still going to buy that house? Most people would/could not and the financing contingency would allow them to get out of the contract.
Please don't take this wrong and I truly don't mean to bash you, but I feel you're not listening to the wealth of knowledge on this thread, you're clouded by something that happened that was totally avoidable with just a little due diligence on your part. Let it go and go get another one. Lots of deals out there.
Stephanie
Ok I guess it’s Me Vs. BiggerPockets. I’m up to the challenge; I don’t mind being the David to your Goliath
The reason I know this “buyer” is holding the property captive is my broker is close friends with the sellers broker and they were talking shop last weekend, the sellers broker said that their “Buyer” is dragging his feet in getting the funding that he promised the seller (to what that means I don’t know). The seller’s broker said he should have showed me the property and not cancelled my open house the day before I was to walk the property. After being canceled on and heartset on buying this property, I told my broker to send over the paperwork showing proof of funds that I could close after a home inspection.
I’ve since then let this property go for a month now it was only this weekend I was told about the above mentioned statement. That’s what was grinding my gears is the fact this wannabe investor looks like he got in over his head with an offer he can’t make good on meanwhile an investor that did his homework (Me) and made sure he could and would make good on his word is now looking into building his property isn’t of buying a perfectly good one. Hence why I made the thread about building because I didn’t want to deal with this nonsense/lack of inventory and am looking into building the property I want. I’m new to this real estate game and am open to others knowledge, not blindly discrediting others wealth of knowledge that I was unrightfully accused of. The thing that baffles me is this community, not knowing my competition, didn’t give me the benefit of the doubt and standby me. Great way to take care of your own Biggerpockets.
I'd like to apologize to Andre. He was making a thread about trying to get a 100% FHA loan no money down (Which is something I would like to know more about) and instead a comment that I made high-jacked his whole thread.
Getting 100% financing will most likely not happen by using a commercial bank.
I would recommend finding a private investor or a partner that you would feel comfortable investing with that can give you the 3.5% needed or is willing to cover the whole loan under his/her name as well.
What is the price of the property you're looking at?
3.5% is a small amount that can realistically be payed off quickly if you roll in the down payment to be repaid via the future rent to your investor.
US Commercial doesn't do USDA, FHA or VA so this isn't a solicitation
Carrington Mortgage Services does all three (FHA, VA and USDA) and they're a pretty aggressive government lender. They don't have many overlays and go with what the FHA, VA and USDA will allow them to do. I have a friend that I can refer you to up in PA. PM me for his info.
Here's my limited knowledge of USDA. You can go to 100% and they do multi family financing, but it depends on the property location as to whether it would qualify. You can realistically go down to a 580 middle score.
Here's my limited knowledge about FHA; with a 580 middle score or better, you can go to 96.5% loan to value and finance the upfront MIP of 1.75%. On top of that, you can get a GIFT for the 3.5% down from a verified source as well as seller contribution of up to 3% of the purchase price.
With FHA, it's not 100% financed, but as close as you're going to get with banged up credit (other than VA or USDA).
Again, PM me and I'll get you my friend's info.
Hope that helps and thanks for the mention.
Stephanie
@Stephanie P. thank you. I am going to pm you now.