All Forum Posts by: David Healey

Thanks for reaching out. Love that you’re a great contributor on BP and an SLC Agent yourself. My wife and I LOVE BP. It’s been a game changer for us that has helped us get into position to break the mold and help us achieve our goals. 

Great Questions. Long story longer: Yes, we can use 75% of the remaining units (not including the one we will be occupying) "established rents" in the new Duplex, Triplex or Fourplex. And Yes, we are unable to use the rents from the unit we currently live in, to qualify for the purchase of the next property on an FHA loan because the FHA guidelines just changed. They used to say that we could use rents in the unit we are leaving if we lived 100 miles away from the next Multi we were to buy OR we had 25% equity in the current Multi. Now that OR changed to an AND. We have 25% equity, but we don't live 100 miles from the new one we want to buy.

So, we lost $2200/mo. worth of buying power from that guideline change and it’s harder now to be able to qualify for another Multi-Family. 

All that to give some context for my question. It's harder to qualify for a Multi in a safe neighborhood, for a reasonable price with how strong the Sellers Market is these days. Question: What FHA alternative loan options are out there, specifically in our Greater Salt Lake area?

Any advise/help on this would be awesome. Also, we should put together a BP chapter or Think Tank bounce ideas off each other.

@Craig Curelop I am house-hacking a Triplex in Salt Lake City, UT. We have refinanced to a Conventional and are now looking for another property in the North-East SLC area. We were planning on using the rents from the current Tri and the standard 75% of rents from the units (not including the one we'd occupy) of the new Multi. The problem is with the new 2019 guideline change, we now cannot use the rents we'll gain from the property we're currently in. That cuts our buying power down by about $2200/mo. which is quite a bit. 
Question: What alternative loan options do we have that have a similar, 3.5% down loan product we can use on Tri and Fourplexes? Any any help is appreciated. 

@Harjeet Bhatti Thank you for your response. I plan to have someone move in with a one year lease when we are ready to move out.

We have house-hacked a Triplex in Salt Lake City, UT for just over two years. We have recently refinanced out of the FHA and into a conventional mortgage product and will now be purchasing another Multi-famlly property using an FHA. I was told by my lender that the FHA does not allow me to use the rents from the unit I'm moving out of in order help qualify for the new FHA loan. I understand why we couldn't use the rents from the new unit we'll be moving into but I don't know why we wouldn't be able to use the rents from the unit we'll be leaving. Is this an FHA requirement or a Lender Overlay (extra layer of protection to protect the lender)? If this is a Lender Overlay, would you mind recommending a lender in the Greater/Salt Lake area that doesn't have this requirement? Thanks in advance for your help.

Is there any way to change the Occupancy clause after a refinance? We purchased a Triplex in Salt Lake City, UT in January of 2017 on an FHA loan, put some sweat equity in it over the course of a year and refinanced out of the FHA to a Conventional loan with with 25% down. We didn't have a great experience with the lender during the refi process. I then put an offer in on a property down town and my new lender asked me if our refinance required owner occupancy. I told her it didn't cause this was the whole point of our refinance in the first place which was to get out of PMI and so we would get to buy another property. So, she had me pull out my refi packet and sure enough it says we have to occupy for a year unless the lender put in writing that weren't required to. This fact was never explained to us, our lender never asked us if we intended to occupy. This is a big, 12 month problem for us. The loan is now sold to FNMA. Is there any way to get the occupancy changed without having to refinance again? Thanks in advance for your thoughts.

@Taylor Chiu You are a resourceful man. Guess you are getting some good use out of all that Oly skillset. Good luck, Taylor. Hope you find a resolution soon.

@Jared Bouzek, great, thanks for the heads up.

@Jared Bouzek, thank you for your response. That makes sense, thank you for your insight. We do plan to continue living there for now. Is there a stipulation on how long we have to Owner Occupy the property with a Freddie Mac Conventional product? Thanks again!

Complicated Question:

We just purchased a Triplex on an FHA in January. We have about 22% equity in the property now and want to refinance out of the FHA into a Conventional product (I believe Freddy Mac will allow us 80% LTV). Our current Interest rate is 3.5% and current Conventional loan interest rates on a 30 year fixed would be approx. 3.8 - 4%. We've considered doing a Cash out refinance to build out another unit within the footprint of the home. But aren't sure about that yet. We know we will lose some money every month (around $100/mo, plus the closing costs of around 2% of the ourstanding value for the refinance), but we want to keep buying multi-families as quickly as we can. Here's my question: Is there a formula you use to know when a refinance would be too detrimental to your REI plan? At what cost should we consider waiting to refi out of the FHA? Hopefully this question makes some sense. Thanks in advance!

Hi William Kelly , I am an RE Agent an REI as well. I like cut and dry communication. Your email looks fine. The only thing I'll mention is that you might be hard-pressed to find a 12% Cap Rate anywhere near the specified location. I don't know how investments the locations you mentioned do. If there are 12% Cap Rates requiring light rehabs going for the price range then awesome, but if you sound like a guy wanting to low-ball every deal that comes up just to ensure you hit the 12% Cap Rate, I would pass. Lots of low-ball offers means lots of time for the Realtor to write and submit the offers. I'm all about being aggressive, getting the right deal and making the numbers work, but most realtors aren't like me. Best of Luck!