A nice little fourplex in a good area is coming on the market and a broker contacted me about it. Since we currently have a VA loan on our primary residence, considering using FHA financing to make an offer ... we would live in one of the fourplex units and rent the other three ... the fourplex has 2 2/1s and 2 1/1s. It also has 16 storage units on the property that the seller wants to include as a package deal ...

My question concerns the storage units ... am I wrong in assuming that an FHA mortgage on the fourplex cannot be used to pay for the storage units along with the fourplex? If it can't be used, is it possible or how hard is it to chop up the deal, using the FHA mortgage for the fourplex and paying cash for the rental units?

Thanks in advance to anyone that's seen a similar situation and can comment!

Before you get too far, do you plan on selling your current home with the VA Loan?

Good question.

As for the storage units I'd be very surprised if they could be part of the mortgage.

If they are counted as non reality items for $0 then possibly. That's probably not the case though.

I thought of that after my post but can't imagine the fourplex value covering the rentals value. Possible I guess.

The sale of the existing home is critical since the underwriter will be very hesitant to approve the loan leaving it as a rental. Huge red flag for the lender. Just went down this rabbit trail and got denied based on that scenario

"do you plan on selling your current home with the VA Loan"

Have owned it for years and lots of equity in it ... can sell if required; had hoped to rent it out.

See my last post. Huge red flag. The underwriter will think "hey this guy wants 96.5% financing on an investment property that he would normally get at most 80% financing." And next question is "how do I know if he ever moved after the deal?". They can't check that without not normal processing. They don't like not normal in FHA. Normal is first time buyers of individual homes with marginal credit and low down payments. You will stick out like a swollen red thumb.

I would see if the property can be split up. Ask the owner what price he wants for the individual pieces. Then see how much of the rental value can be snuck into the 4plex. That is your down payment on the rentals and work out a seller finance deal on the remaining cost of the rentals.

Got it. If I was less financially savvy and had less money, I'd make the underwriter feel better about loaning money to me. j/k ;-)

That's why I came to the board to ask -- thank you for the experience and for the perspective.