Would You FHA? $179K 15% Cap 1st Deal 5-Plex

[Jonathan Napper]

I have no debt, decent income and would be first time home buyer. Would you FHA 5% down? Here are the details. Obviously I did NOT include the 5% down. Any advice would be great.

AP - $179K ($179 @5% 30YR)

GSI - $27,000 ($2,250pm)

Vacancy - $1,350 (5%)

Effective Income - $25,650

Gross Operating Income - $25,650

Total Operating Expenses - $6,926 (Provided by the broker but I will verify)

NOI - $18,725

Debt Service - $11,531

Cash Flow Before Taxes - $7,194

YEAR TWO - $6,000

YEAR THREE - $6,801

YEAR FOUR - $7,645

[Elizabeth Colegrove]

I would check financing for a 5 plex. For all I have seen (although I haven't bought a multi-plex) anything over 4 is considered a commercial loan. That is why 5 plex have so much more trouble because are not worth the "extra" trouble. 

That begin said, I personally would do a conventional 5%. It has no funding fee and the pmi drops when you get to 78% of the loan.