Florida Four Plex House Hacking

[Summer Shelton]

Looking for some advice on purchasing a four plex. 

Currently in the process of selling our property in missouri and looking to purchase a 4 plex in Florida. 

We found one for the price of 1.9 million. And really want to know if it would be feasible to purchase the property given some circumstances. 

We want to use a FHA loan to purchase the property. We meet the standard qualifications for the FHA loan. However the monthly mortgage is potentially 12K a month. I work full time but don't make that much per month. We would use the additional units to bring in the funds to pay the mortgage plus expenses. Plus we will have Capitol from selling our house that would be enough to cover a down payment and 6 months of payments.

My question is, typically do banks lend on primary/investment properties with such a high price? 

I understand there are alot of circumstances and it would come down to the bank. But looking for some feedback from anyone who has done a simialr deal.

[Jason Wray]

Hi Summer,

I have been here in Florida for over 35 years and there is currently No County that allows for an FHA purchase of a 4 unit for $1.9M. Key west offers the highest of $1,786,950.00 and Naples-Marco Island slightly above $1.4M. Most other counties are around $985K with some around $1.1M

You can check the county you are interested in on the FHA Mortgage limit website. entp.hud.gov

You also want to make sure you run the math to ensure it passes the "Self Sufficiency" test where the unit rents must support the PITI by using the 75% and vacancy calculation. There are calculators online but make sure you are familiar because I get a lot of people call me because their loan officer failed to run the numbers and they are getting ready to lose a deal or earnest money.

If you want to go FHA you can always put more down but I would take a look at Fannie Mae as well for High Balance areas.

[Sarita Scherpereel]

Hi @Summer Shelton I'm not sure about the loan limits in your market in Florida but I do know that would not work in Chicago. I looked at the HUD limits online (quickly skimmed it) but didn't see any county that was close to the amount. I could be wrong but that seems a bit high for this program.

The FHA loan is for a buyer that intends on owner occupying the property. The loan requires the buyer to live in the property at least 1 year. With this in mind, the property must pass a self sufficiency test. Have you run the numbers on that?

You should definitely talk to a lender about this. They can give you specific guidance on your finances and how to reach your goals with more insight than anyone on the forums. Most lenders on BPs are investor friendly and won't hound you with incessant follow up. 

I hope this helps a little! 

[Devin Peterson]

Quote from @Summer Shelton:

Looking for some advice on purchasing a four plex. 

Currently in the process of selling our property in missouri and looking to purchase a 4 plex in Florida. 

We found one for the price of 1.9 million. And really want to know if it would be feasible to purchase the property given some circumstances. 

We want to use a FHA loan to purchase the property. We meet the standard qualifications for the FHA loan. However the monthly mortgage is potentially 12K a month. I work full time but don't make that much per month. We would use the additional units to bring in the funds to pay the mortgage plus expenses. Plus we will have Capitol from selling our house that would be enough to cover a down payment and 6 months of payments.

My question is, typically do banks lend on primary/investment properties with such a high price? 

I understand there are alot of circumstances and it would come down to the bank. But looking for some feedback from anyone who has done a simialr deal.

Hi Summer, Sounds like that purchase price would be too high for any county loan limit per FHA guidelines. The good news is that you can still acquire this 4plex relatively cheaply with only 5% down using a conventional Fannie product. Where in Florida are you looking specifically to purchase? I live and work across the state so Id be more than happy to help answer and specifics on in-state residential financing!

[Melvin List]

@Summer Shelton with 20% down you should be able to find a Jumbo product that will also allow you to use the other 3 units as income.

[Derek Brickley]

Hey Summer!

I'm currently househacking and I used the conventional loan with 5% down. As long as this 4plex would be in a high-cost area then conventional would still be a possibility for you. You don't need to worry about "self-sufficiency" which can be very difficult with FHA at that purchase price.

Are the other units rented long-term with leases in place? Short-term rentals?  You can potentially use 75% of the long-term rents to help qualify.  Easiest way to look at this generically would be:

Proposed mortgage payments + any other monthly payment you have

Your monthly income + 75%*long-term rents

This always needs to be less than 50%, and of course other factors would influence your ability to qualify but this hopefully will give you a way to guesstimate the feasibility.  Feel free to reach out with any questions you might have on that!

[Anthony Swain]

Hey @Summer Shelton,

Fellow house hacker here!

A four plex is definitely a great opportunity to house hack, especially if you're doing it with a significant other or partner (sounds like you might be?). 

I agree with some others in this thread that the loan amount doesn't seem like it would work for the FHA limits. As others have mentioned, a 5% conventional might be an option, but with that loan amount there might be limits too. My wife and I used the 5% conventional for a duplex last December, but it was well under a million.

Also, $1.9 million sounds like a very large number off the cuff without having seen the property/location. Do you plan on doing STRs or is this a brand new luxury 4-Plex where you may be able to get high LTR rents?

Just quick math with 5% down your loan amount would be around $1.8 million and depending on interest rate, $11.5k to $12k monthly mortgage. Without considering insurance, taxes, maintenance, vacancy, or cap-ex you would need to rent the units for ~$3k/month to break even. My recommendation would be to do a deep dive into your deal analysis and see if the numbers truly make sense. 

Good luck Summer! Please keep us posted on how things go. Feel free to reach out if you'd like to chat more about house hacking or STRs.

-Ant 

[January Johnson]

I sell STRs on the Emerald and Forgotten Coasts of FL and currently have a 4-plex house-hacking deal under contract for a buyer. The purchase price is $1.115M and they could not get an FHA loan here for that amount, so they are doing 5% down instead of 3.5% and had to get a non-occupying cosigner to make it work. Luckily the mom of one of the buyers has excellent income, low debt, and great credit and signed on. These are very reliable buyers and they are experienced in renting and self-managing other properties, so it is all going very smoothly.

Just thought I'd chime in from the agent perspective with a real-world example.  Good luck to you!  I wish I'd done this 30 years ago, myself!