First REI Property, 4Plex, Good Deal?

[Chris Burgner]

Hello Everyone!

I am brand new to the site (just joined a few weeks ago). I have been reading many of the guides, articles, and blogs over the past several weeks and really like what I've read thus far. I am looking to buy a property in general, and would like to buy something like a duplex, triplex, or quadplex where I can live in one unit and rent out the others. I figure this is a lower risk way to get into my initial REI property, especially because I am looking at properties whose mortgage payments I can mostly afford myself.

I found a property which looked quite attractive based on the listing, and I toured it today and like it a lot.  I'd like to explain some details about the property, as well as one major detail which may be a deal breaker (thus why I am posting here):

The property is a quadplex, with four units (each 2 bed/2bath), each about 1000 square feet.  There are 3 garages (detached).  The unit is fully leased right now, but several of the leases are expiring soon and the tenants are moving out (so I would be able to move in).  Current rents add up to $3950 (bottom units are more expensive because they have unfinished basements).  

Given the building price, assuming 20% down and a 4% interest rate (I qualify), and a 30 year conventional loan the mortgage payment (based on the zillow mortgage payment calculator) would be: $2131 (including tax and insurance), including the monthly HOA dues for all four units ($939), the total monthly payment would come to $3070. I want to also point out that I am not looking at this property as uniquely investment (since I am living there), so if I can live there for free then I am also making money.

Here's where a little bit of the weirdness starts. The building is in a "complex" with three other sixplex buildings. Each of the sixplex units are owned by other people and are either condos or other rental properties. However, all four buildings are part of the same HOA, the HOA covers external maintenance on all the buildings, and the common grounds (parking lot, etc). Now, the potential dealbreaker is that the building is non-warrantable, and the reason (as far as I can tell) is that more than 50% of the units (between all four buildings, since they share an HOA) in the HOA are investor owned.

I don't know much about non-warrantable properties, but I'm told that it is more difficult to get loans on them?  This building has been under contract 3 or 4 times in the past several months and has fallen through each time due to financing surrounding the non-warrantability of the building.

What do people think?

Chris