Investor · Oakland, CA · Member since 2016 · 171 posts · 63 votes
I know i've read a few blog posts out there but has anyone invested in a Multi-Family home with an FHA loan as there first investments? What was your experience like and do you recommend for someone who's a first time investor..? Thanks!
Real Estate Agent · Mechanicsburg, PA · Member since 2014 · 529 posts · 217 votes
9y
@Jason Pabon I started my investing career using a FHA loan on a 3 unit building. As others have mentioned, its a great way to start and I would highly recommend it. FHA only has a 3.5% down payment and you can ask for 6% in closing costs. When I made my purchase, 2 of the 3 units covered the cost of the mortgage including escrow. It was a great way to save more money for the next investment, learn the management side of investing, and use minimal capital.
Similar to @Tyler Turpin experience, my girlfriend at the time was not a huge fan of living with tenants. Even though our property is in a fantastic area, she would have preferred a single family home. If it is relevant to your situation, you should consider your spouses feelings. Overall, my then girlfriend and now fiance saw the benefit of house hacking. It couldn't have been that bad since she said yes!
I could not recommended this more highly. You have to jump through hoops, but I just bought my second house with an fha loan that is 3 units (refinanced the first as you can only have one fha at a time). I think this is the best way, especially for young people to get a huge jump-start investing and learning about real estate. Feel free to reach out if you have specific questions.
Hey Erich! I am curious to know if the management side of taking care of the other 2 units was any more difficult with you always being on site? Did you notice a higher frequency of repairs from the tenants? Also, what are some things you recommend to consider when buying a multi unit that you plan on house hacking?
@Jason Pabon Looks like @Selton Shakes Jr mentioned NACA - if you have ANY questions about qualifying for that program, I've been through the entire process in NorCal and would be happy to talk to you about it. You can buy up to 4 units, and the interest rate always seems to be lower or at least comparable to FHA. To answer some of the questions you mentioned, I'm pretty sure you have to be at a job in your current field for at least one year. They DO require more documents than FHA underwriters, but if you have a great counselor, he/she gets you through it quickly. Another "hurdle" is that you have to be in the property for THREE years, not one (like FHA). If you decide to move (or sell) before your 3-year term, I believe you pay NACA a fee of $25,000? But, as mentioned before, NO MONEY DOWN, no closing costs.
The Oakland office currently has NO counselors, but I was transferred to the Upland office in SoCal and work with a GREAT counselor (Abelardo G.). I received my approval for a 4-plex about one month ago. Anyway, PM if you are interested in hearing about the process.
Katie this is an interesting approach (strategy) I have not yet heard of. Do you think the hurdle of being locked into the property for a longer time period and requiring a stable job history has more to do with why not as many people are going this route versus an FHA?
Real Estate Agent · Oakland, CA · Member since 2016 · 123 posts · 77 votes
5y
@Greg Koszkul oh yes, there are many requirements/ hurdles to securing this loan. It's a non-profit, so depending on the NACA office location and length of employment of the loan officer, it can be really frustrating to go through the process. There is no "fast track" for people who know exactly what they need to do/check all the boxes - you are completely at the whim of your loan officer and some of their illogical rules (that are really designed to weed people out).