Down Payment Assistance Hack Idea

[Keith Morrison]

Have a great idea, that I will be using myself, to get into a house hack for very little out of pocket. Hopefully this can help someone else get their investing career started too! 

Florida has an amazing First-Time Home Buyer program for Down Payment Assistance called Hometown Hero's.  It gives 5% of the home value, up to $35k for assistance towards down payment and closing cost.
It's a government program open to all full time (35hr+/week) employees of a Florida based company. Must be a primary residence. 640 min credit score. Program has a low fixed interest rate. There are income restrictions, but they differ by county, and are around $130k max. And cannot exceed max loan limit by county. **Veteran's do not need to be First-Time Home Buyers!! 

This is not free money, but a 0% interest loan in the second position. And it must be repaid if you move out, refinance, or sell the property.

With all that being said, here is my idea....

Buy a multi-family property w/ 2-4 units using a FHA loan with 3.5% down. Some reserves will be needed for FHA for a multifamily property. Typically 3 months PITI. and FHA must past self sufficiency test. (this means the market rents will be more than PITI)

Use proposed/current rents to qualify for the largest property possible. 

My goal is to find a property that has a detached garage that can be converted in the near future to livable space. Create an extra unit, to move into, rent, or STR, increasing cashflow even more.

...

So if the Down Payment Assistance covers 5% of the home value, then that covers the 3.5% down and leave 1.5% left for closing cost. Obviously that won't cover everything, but probably leave you with 1.5% left to pay. So on a $500,000 home, maybe $7,500+ out of pocket. 

What do you guys think? 

P.S. - I'm a lender in Florida who has this program if you like the idea and want to see if you qualify!