I think you're trying to find a four plex for $600K with rents of $1900 per unit. So, my first question would be is this a deal. Let me assume normal investor terms but a conventional loan.
Price: $600,000
Down: $150,000 (25%)
Loan: $450,000
Payment: $2697.98 (P&I only, 6%, 30 years)
Gross rents: $7,600
Expenses: $3,800 (50% rule)
NOI: $3,800
NOI per year: $45,600
Cash invested: $150,000 (plus closing costs)
Cash on cash return: 8.8%
Not an awful deal, but not a screamer, either . I'd like to see that cash on cash return up in double digits, preferable high double digits. Yours is even less with closing costs.
Now, what if buy this with OO FHA financing with 3.5% down and a 30 year, 5% loan?
Down: $21,000
Loan: $579,000
Payment: $3,108 (5%, 30 years)
Gross rents: $5,700 (only three units)
Expenses: $3,800 (these don't change, but in reality will be slightly lower since presumably you won't be a problem to yourself.)
NOI: $1,900
Cash flow: -$1,208
So, you're essentially paying a rent of $1200 instead of $1900.
I'd want to be sure to have at least $10K in cash or readily available credit to be into a rental like this.
Now, can you qualify. Not sure what current lending guidelines are, so I'll use the old fashioned 28% percent limit. Not sure what taxes and (landlord) insurance will run you on this, so I'm just going to guess it at 20% of the payment.
PITI: $3730
Monthly income: $7500 ($90K/year before taxes)
Percentage: 50%
Pretty sure that will not fly under anyone's rules.
What if you can include the rental income?
Gross rents: $5,700
less 25%: $4,275
PITI: $3,730
Net rental income: $545
By this calculation, you're ahead. Whether or not an FHA lender will do this calculation or not, I don't know. You may have a hard time getting any lender who will do this loan at all. Four plexes are sort of a no-mans land. While they're theoretically qualify for conventional loans, not many lenders want to do those loans.
