My Play on FHA Loans: Your Thoughts?

[Clay Manship]

For those who don't know, I am in the market for my first primary residence. I will be buying a 4-plex using FHA 203k, and will be occupying the unit for a while. However, the more I think about the way the process works, the further I develop a strategy to best utilize the great advantages at my disposal. Here's what I am thinking:

1. I will buy a 4-plex at $100K. I will then spend an additional $100K in renovations for a total loan amount of $200K.

2. After the renovations are completed and I am occupying the property, let's say the property will then be appraised at $260,000. Therefore, my net equity in the project is $60,000.

3. I would then want to refinance immediately into a commercial loan, in order to escape the monthly PMI. FURTHER, once this property is refinanced through a commercial lender, and paid-off in full in the eyes of the FHA lender, I would then want to jump directly into another FHA 203k project.

And that is where my idea gets confusing. I want to utilize the FHA 203k program to the best of my ability, as well as leverage my relationships with commercial lenders such that I can get on FHA's books, pay them off, and then get into another FHA 203k loan almost immediately. I have spoken with my FHA Lender and he has told me that, to the best of his knowledge, FHA simply has a 6-month seasoning period where you can't touch the note, refinance, pay extra principle, etc. That's it. He stated once I am paid in full and my 'FHA Reference Number" has been declared as paid-off, I should be able to rinse and repeat.

Anyone have any experience in this or obtaining MULTIPLE FHA loans? Would appreciate any feedback.