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Couple of things:
1) if you use FHA, I don't think you're allowed to rent it out. I know there are rules like that with VA loans, but I believe they also apply to FHA. So I'd look into that.
2) if you're using FHA, that means that you're probably putting down 3-5%. So your mortgage payment will be fairly high, meaning that your monthly revenue from rent will be like $200. You're one repair away from being in really deep trouble. Personally, I think it's way too risky unless you have a huge cash reserve. Which if you do, I wouldn't do an FHA loan, I'd go with a conventional (lower monthly payment and no required PMI).
TLDR: I don't think it's a good idea
OP,
I bought my condo in early 2021, and I had to put $30k into my place over the past 3 years, replacing the windows, sliding glass door, electrical, washer/dryer, furnace and hot water heater. Fortunately, the price of my condo reflected all this, but I made sure that I was prepared when I bought the property to put money into it early into my time owning the place.
I would echo the other person’s concerns and say it’s a bad idea, at least until interest rates come back down a bit.
I think to be able to rent it out, you must at least have that as your primary residence for two years, but may need to do research on that
I can rent both bedrooms out. At its face, are there any other risks/reasons you think this is a bad idea? Please be honest!
If you’re going to live in the home for at least 5 years it could make sense - I’d just be very honest with yourself about how willing you are to rent an extra bedroom out to a tenant while you’re living in it. Very different vibe than living with a friend
For me I could comfortably afford the entire mortgage on my condo I bought 5 years ago (and am saving a lot on inflated rents in my city now) so I was fine not renting the second bedroom out. And after owning it 5 or so years you will have a better sense for maintenance / what actually might need replacing in the near future etc to better estimate your TCO once you turn it into a rental
I have had a sublet in some pretty egregious situations, no problem with a random tenant. Live in a HCOL city where it is not too difficult to find a decent human being.
We have an FHA loan and we are unable to rent the space as a whole, but if you live there and rent a room that is allowed. But you have to be a resident in order to have an FHA loan. So if you do end up leaving the city you will need to refinance out of an FHA in order to rent it out.
FHA loans are not meant for investments they are meant to make home ownership more accessible.
FHA is a federal based program I don’t think the state has anything to do with it.
I am also not sure on the refinancing part. The way I read the contract was that as long as we have the FHA we can’t rent the property but I will admit it was a crazy time and there was a lot going on so I could have misread it.
Does your HOA allow subletting or renting? Many don’t.