Posted by Natalie-VA on July 17, 2008 at 09:55:49:
Kevin,
If this deal is possible only through FHA financing and committing loan fraud by not intending to move in, I would say it’s not worth it. No disrespect intended.
–Natalie
Triplex with section 8 tennants - Posted by Kevin C
Posted by Kevin C on July 16, 2008 at 12:49:41:
Hello,
So far my real estate search has been pretty un eventful however I have found a 3-unit property that is currently rented out to section 8 tennants and I just have a few questions that I was hoping the fine readers of this board can help me with.
The first being my funding is fairly limited $12k to invest with. I was thinking of getting financing through an FHA loan and putting the 3% down with the “intent” on living there. (I would not live there but for the sake of the loan I have the intent however).
So the financials of the investment are as follows:
Purchase price $230k
Downpayment $6900
GAI $43440
GAE $18000
P&I $17318
Cashflow +$ 8122
So with what little experience I have it appears that this property would be a good investment given the numbers but the questions I have are:
Given I would like to finance this through an FHA and all the units are rented would I actually need to have evict a tennant from the property to recieve the loan? I would like to keep the tennants in place but an FHA loan appears in my eyes as the only way I can make this deal possible.
Also if I put the property under contract is it possible that the inspection could conclude that there are improvements that would need to be done to get it up to section 8 code?
Finally for the people who rent to section 8 tennants are you able to have annual rent increases or is this strictly based on HUD criteria which would vary but area.
This property gives me a slightly uneasy feeling based on the location of the property. It is definately not on a very good street in my city. So in terms of an exit stratagy I feel with the given market if I had to sell this within a year I would be hard pressed to move it.
Hopefully I have written enough to get some good thoughts from all of you and thank you for all of your help.
Regards,
Kevin