Is a 403K FHA the best way to house-hack a 4-plex

[Scot K.]

Hi, 

I want to buy my second rental property but I'm not sure the best way to go about the financing. I want a 4-unit building, rehab as many units as I can, live in one for a least a year and then move out and rent the fourth unit out. I know about BRRR and that's the strategy I want to follow as I add more properties. I hope to find a property in the 200k -300k range and can put up to 20 percent down but if I can put down less I would prefer that. What I'm unsure about is which loan I should get, a 403K with 3.5 percent or a conventional rehab loan but then I would have to put down a lot more. But I would have more equity for the next deal. I'd appreciate any advice you all can offer. Also, any good lenders you know please let me know. Thanks!

[Matthew Porcaro]

@Scot K.

The 203k is great for a 4-unit because the down payment is 3.5% no matter how many units.

Homestyle renovation loan for example requires hire down payments for more units. Combined with the HomeReady Program, you’ll pay closer to 15-20% down depending on how they judge your first time homebuyer status.

Also, remember with something like a 4 unit, your lender is going to want to see a few months rent payment reserves in case you can’t rent it out immediately.