FHA House-Hacking In A Pandemic

[Houston Southard]

Hi everyone, 

This is my first post. 2 years ago I bought my first 4-family with FHA financing. I had poor credit, over $10,000 in credit card debt and another $50,000 in student loans, but with my W2 income, a seasoned chunk of change for closing from a friend at 0% interest, and 75% of the expected rental income, I was able to make the debt-to-income work. Barely. After that I did what you'd expect: Moved into a vacant unit, did some cosmetic repairs and brought the rents up to market value. This hiked the property value, and recently I was able to refinance into a conventional loan by having it appraised at about 130% of what I bought it for. Even living in the fourth unit, even after my mortgage and property utilities and 15% set aside for operating expenses, I'm still clearing $350 in net income. I've been strategic about this, but I've also definitely been lucky. 

Part of that luck was that when I bought the property, a vacant unit was available for me to slide into. Currently, I'm using FHA financing to buy a second 4-family. Since I converted my first property to conventional, I now have an FHA available again. Once again, I'll be moving into a vacant unit. Today, though, the field is a little different, which is why I'm here.

While I understand the FHA guidelines aren't always enforced, I don't want to give a lender any incentive to call my note due. One way they could supposedly do so is if I don't meet one of their criteria, which is that I intend to occupy one of the units within 60 days of closing. I close 8/13, and the lease nearest expiration doesn't end until 10/31, so I'm just over the wire. This is solved easily enough through lender leniency or just extending out the closing date, but that's not my problem. My problem is that I need to live in one of these units to satisfy the requirements of the loan, and the tenant whose lease is expiring has been there almost a decade and may not want to leave. With the economic climate being what it is, I'm not sure how ethical it is to ask them to leave. 

Has anyone had experience with this in the past few months? I know it's a bit of a one-off, but I'd like to handle this as delicately as I can, because, ultimately, I'll have to move in. Please let me know your thoughts!

Houston