Help! time is of the essence!!

[Jeff Davis]

I have a couple questions and any guidance/insights would be much appreciated. My girlfriend and I are trying to buy our first property. a duplex in Amarillo, Tx. Originally I was going to use a FHA loan and house hack. however, both units are occupied with the earliest lease expiring in October. The other lease has around 8 months left. Here are my questions: 1.) Does a house with conventional financing need to be owner occupied? 2.) Do I have to honor the previous owners lease agreements and if so what are strategies to get one of the tenants out? 3.) My mortgage broker said the problem I'll run into is getting a insurance policy if occupied at time of closing. is this true? If this were the case how could investors finance occupied homes?

     4.) last question isn't financing related but one that I've been struggling with. How do you find multi family deals. Maybe it's just my area but as soon as i see one pop up and request a showing from my real estate agent the house is already under contract. I don't think I've seen one that hasn't been in a trash neighborhood or way overpriced last longer than 3 days.
  

Thanks in advance for any advice!

[Erik W.]

Hi @Jeff Davis and welcome to BP!

Okay, my first piece of advice isn't anything you asked for, but I believe it's important enough to give regardless.  This may sound old-skool and prudish, but if you're going to buy a duplex do NOT put your GF's name on either the loan or the title.  You two aren't married, and unless you want to set yourself up for a nasty mess if/when you guys split up, don't buy real estate together.  Either get a marriage license or buy it yourself.  Nuff said on that.

FHA loans require owner-occupied status at the time of closing, but can be rented out later. The typical question on the application says, "Do you intend to live at this property?" and if you say "No" then the app is rejected. A lot of folks answer "Yes" with no intention of moving in. While that often doesn't cause any problems, it is fraud and not a good way to do business. Being sneaky / casual with one's lenders carries a bad rep in this biz.

You will have to honor whatever lease term is in effect when ownership transfers, unless Texas has some odd exception that says you don't.  You can try to offer an existing tenant a buy out: maybe a couple thousand bucks to move out.  Don't pay them until AFTER they're gone though.  You can put the money is escrow to assure them it's coming.  Maybe help pay for moving expenses up front.

I don't know what the mortgage broker is talking about regarding difficulty getting an insurance policy.  I've gotten insurance on occupied and vacant units easily.  Talk to your insurance agent; that's his/her area of specialty.  

The best deals of all kinds are typically off market, often via word of mouth, online advertising, or direct mail/sign campaigns.  There are dozens of articles on this site and videos on YouTube.  Know your local laws though, before posting signs: some towns have ordinances forbidding them and you could get fined.

I hope this helps.