FHA Loan for a Property made by a Family Member

[Nicolas Jefferson]

Hello BiggerPockets!

I am new to real estate investing. I'm only 22 years old and currently pursuing a Master's degree, but I've always wanted to invest in real estate for the past 2 years. I always find myself back on this website looking at people's ideas and successes, so I decided to finally take a chance and join the forums!

To get back on topic, I've had a scenario for awhile and I didn't know if it was possible or if there is something wrong with the logic of my thinking. Can you buy a newly constructed property with an FHA loan if a family member built that newly constructed property? My father has been kind enough to say that he would help me in my investing endeavors, so he mentioned possibly building a whole new four-plex property, and I'll buy that property from him with an FHA loan.

Our dream scenario would be that he would be able to make money as well as I would be able to buy the four-plex from him with an FHA loan for more than he spent constructing the property. Once I acquired the property, then I would be able to rent out the other 3 properties and be able to live for free and possible have some cash flow. No idea if that is flawed thinking, but I'm not sure if this scenario is possible. It might be possible that construction of a new property is generally more than the appraised value, but that's why I'm asking you guys!

Another great thing about this scenario is that my father is lucky enough to be a manager of a lumber business, and it's easily quite possible that he can get most materials for less than the normal cost, so that could widen the profit margin as well.

Thank you!