All Forum Posts by: Kendra Morrison

@John Warren Thank you so much!

Hello, I'm new to this site and had a couple of specific questions about acquiring an FHA loan to finance my first multi-family investment property.

1.) I'm aware you can refinance your home loan after you gain 20% equity. I've been told you can refinance for a traditional loan and drop your MIP with the switch. Is this true and are there any stipulations or requirements I should know about to do this?

2.) If you refinance your FHA loan can you then get another FHA loan in the future for another property considering you would no longer have one? I know you can't have two FHA loans at a time.

3.) If you have a traditional loan can you also have an FHA loan at the same time or the combo of a USDA and a traditional loan?

4.) Is it difficult to get approved for a secondary loan once you have an existing one or is it too impactful on your debt to income ratio to get approved?

5.) With an FHA loan how long before you can use a service like Air B n B? I'm aware that you must live there for one year and have a period of time before you can do short term rentals. I've seen a minimum requirement of 30 day rental terms. Does that ever change?

6.) Why is it so difficult to get an FHA OTC loan that covers the construction of a new construction build, mortgage, and closing cost?

7.) Do you go through a mortgage broker to acquire an FHA loan or apply for pre-approval online and go through there own contracted banks?

8.) Can you purchase two sets of duplexes if there being sold together and are on the same parcel? If there is a lot division where the units are technically on two different lots but next to one another does that make a difference?

9.) I'm aware FHA only allows you to purchase up to 4 units which falls under a residential loan instead of commercial. I'm also aware that they will not give you excess money (for renovations) past the purchase price. Is it difficult to get a secondary loan to finance repairs?

10.) Are there restrictions on how long you must keep the property before you can sell it?

Thank you for any insight you have and advice on FHA Loans.

Thank you for your feedback Patricia. To answer your questions the financing is my main issue right now. Being a new investor I do not have the equity or large lump sums of money to throw 20% down on a large property. There are no down payment assistance programs anymore in my area. Even coming up with the 20% down payment on a single family home would be difficult for me.

Building seems to be a good route in my situation because the comps on a 4 unit building in SWFL are routinely $400,000 and up. I've been able to find modular housing that can be built for less than that giving me instant equity. The 4 unit buildings I can find tend to be older and in need of repair. The FHA loan will not allow any wiggle room for renovations therefore I'd be coming out of pocket which I can't do unless I want a secondary loan. I do have a short and long term business plan but that was beyond what I was looking for in this post so I did not include all the details of that. I've had a timeline established for almost a year at this point while I save money towards the down payment, closing cost, and fees associated. I am by no means going in blind or rushing the process.

As stated in my original post I am fully aware of zoning issues and I am looking anywhere from Charlotte county to Orange County primarily focusing on Sarasota county to buy land. I have not selected a plot of land yet as I am still researching and not ready to buy anything at this time. Things go quickly where I live and there’s no sense in picking a property 6 months before I am ready to buy as it will more than likely no longer be available come the time of purchase for me. I am not fully familiar with what builders are building outside of what I see as new construction of duplexes for sale. I’ve researched modular home builders and even though I am able to find several servicing Florida it is difficult to find ones that do multi-family. The ones that do tend to have plans available for duplexes only and rarely mention 4 unit properties. This is why I was asking for recommendations for builders. 

The demand for rent in my general area is steadily growing and $1,000/month minimum is standard whether its a studio apartment or a 1/1 with a carport. Anything updated with more than one bedroom goes for much higher. I live in an area with high levels of transient people/snow birds. In season a single family home can go for 3k a month in Englewood. I'm confident with an updated duplex I could rent units for $1,200 -$1,400 each monthly depending on the area of course. I'm also aware it's difficult to get the FHA OTC loan again going back to why I'm asking if anyone has experience dealing with this type of loan or getting approved for it themselves. I am merely doing research and asking for advice for the exact reasons you're concerned about. I do appreciate you taking the time to give me your opinion!

Hello, I am new to this website but I am looking for any information or advice this community can offer on building a 4 unit multi-family property for investment purposes. 

I am going to be financing the project through an FHA loan at 3.5% down payment. I have read contradicting information on whether or not FHA will finance a multi-family property. Most of my research is saying yes but that it is difficult to get an FHA OTC(one time close) loan. This would include the purchase of land, financing of the construction loan, and the overall mortgage after it is built with one monthly payment and one closing.

The limits for my area/state of Florida are 4 units which keeps the loan residential and not commercial. FHA also limits the loan to 4 units. I was also considering going about this with a modular builder and avoiding stuck built on site construction to keep my cost down. I've seen ranges of $60/sqft. - $110/sqft. depending on how finished the product is presented. The FHA OTC loan prevents the loan holder from doing anything themselves and all work must be done through a contractor. I am also aware that I have to make sure the land I purchase must be zoned correctly. Along with the land cost I'm aware there will be additional cost to clear it, rent a dumpster, add a septic tank, and have electricity ran from the city to the property, etc. My area of SWFL has ever rising rental cost and I believe I can rent each unit (3) at $1,400+/month while living in the 4th unit. I must live in the 4th unit a minimum of a year under the loan terms.

The main reason I am trying to build is because of the reduction in repair cost, the increase in potential rent, and the lack of available 4 unit properties anywhere near my current area. I can find a million duplexes but rarely two sets. I also don't know if FHA would allow me to purchase two separate sets of duplexes even if they are being sold all together. FHA also will not allow me excess money past the cost of the building for repairs whether I were to be approved for it or not. I would have to take a separate loan out to repair the building in order to update it and get what I need in rent monthly.

My questions:

1.) Does anyone have experience building modular multi-family properties, using an FHA OTC loan, or doing anything close to this strategy.

2.) Any advice on what builder to use or how to go about getting this type of loan? I am struggling to find builders in Florida who do multi-family buildings. 

3.) Does anyone know if I can avoid a realtor and go directly to a mortgage broker to procure the land and get the loan. 

4.) Can I avoid an architect by using floor plans I find online or choosing from the options the modular home company gives me.

5.) Any general recommendations or advice on this topic are greatly appreciated.

Thank you for taking the time to read this lengthy post and reply!