Live-In Flip MFH + FHA Financing

[Patrick Bross]

Hey BP,

I was poking around the site a bit, but couldn’t locate my answer. Hopefully you guys can provide some color.

What are the implications of:

• Purchasing a MFH (lets say a duplex) with FHA financing and 3.5% down - owner occupied
• Lets assume this place needs some work but is livable and manageable
• Using cash reserves, put work into each unit (assuming no long term tenant), essentially forcing appreciation and closing in on 75% LTV (theoretically)
• After the 'seasoning' period, refinance into a conventional loan dropping PMI and hopefully gaining more attractive P&I payments
• Convert to investment property —> Move out —> raise rents —> repeat
• Is this a strategy that is utilized often?

I apologize if this topic has been beaten today. Please share your feedback, comments, and experiences!