Buying Multi-Family House #2

[Dustin DeBoer]

I am currently looking to buy my first multi-family home but I don't wan to stop there. Before I purchase by first home, I want to set myself up as best as possible to get into another one in less than 1.5 yeas. I planned on using a FHA loan for the first so my question is:

For someone with limited cash reserves, how do you suggest purchasing your second multi-family home once your FHA loan has been used on the first one?

I've considered taking out a lenders loa

[Bryan O.]

@Dustin DeBoer transferring to LLC doesn't not do anything because it is the loan that needs to change, not the owner of the deed. Doing that keeps your name on the loan. The FHA loan itself needs to be paid off in order to use it again. This means that your LLC can buy it with a new loan, or you can refinance it to conventional, etc. Your best bet is to put in enough sweat equity to refinance conventional at 80% then reuse the FHA loan.

There are also other products offered by banks for low down payment. I think Wells Fargo has a 3.5% and most banks have a 5% down. Most of them are for SFR, but some can do 2-4 units as well. In theory, you could FHA your first for a year, use a different owner-occ for a year, refinance FHA and use, lather rinse and repeat.

Your lender should be able to use 75% of market rent to calculate as income for the next property. @Blair F. I have yet to find a lender still requiring 2 years of rental income. I think that type of lender is a dying breed. They now use the existing lease and take 75% of that. Additionally, they have the option to count rent for a yet-to-be-rented unit using market rent rates, though you would have to make sure that particular lender is willing to do that.