I want to introduce a 3 unit buy & renovate client in this post who tells the story of using Fannie Mae Conventional HomeStyle renovation mortgage to restore a 3 unit property.
18 months after closing on my first 3 unit deal/house hack, I had the opportunity to buy an off-market 3 flat in Chicago’s’ Bridgeport neighborhood. The property was owned by a family member of mine who was looking to sell in the next 3-6 months. Right around the time I found out the family member was looking to sell, I heard Perry on a podcast, and he was promoting a hybrid hard money loan for non-owner-occupant buyers. After talking with Perry about the deal and going over the numbers, it was clear the only way I could get funding for the deal was to use a conventional owner-occupant 5% down HomeStyle renovation loan.
With a loan program picked, I needed to get the property under contract, agree on a sale price, and find a contractor. Getting the property under contract and coming to terms on sale price was no easy task. However, I was fortunate to get the property under contract for a price that was fair for its current condition. With the help of Perry and his contractor referral I was able to come up with a scope of work for the remodel along with a remodel budget.
The initial numbers:
- Purchase Price $300,000
- Remodel budget $260,000 with a $26,000 reserve fund
- ARV (After repair value) $893,000
- Estimated renovation timeline 6 months
I closed on the property in January 2024 and the demo process started once the permits had been approved in April of 2024. Due to permit issues and inspection issues, the project took longer than expected, but luckily the delays had been factored into my underwriting for the project. After the project finished up, I was able to move into the property and get the other 2 units rented in a short time.
Post remodel/ house hack numbers:
- Monthly mortgage: $5530
- 1st Floor rent: $1800
- 2nd Floor rent: (currently owner occupied with a projected rent of $1900)
- 3rd Floor rent: $2300
- Owner occupying for only $1430 a month (well below market rent!)
- Post-move out/projected monthly positive cash flow: $470
In March 2025, I reached out to Perry again, but this time to do a cash out refinance. With the help of Perry I was able to pull out about 70% of my total cash invested and was left with about $236,000 in forced equity.
Just as much as the importance of a good deal, you need a good team on your side, and Perry is someone who I highly recommend having on your team. Without Perry, I might not have been to get funding for the deal, and I definitely would not have had the contractor that I used on the project. Perry helped me on the front to get this deal closed, helped me during the project by coming to the job site, and helped me on the back end with the cash out refinance. As I get ready to start looking for my next deal, Perry is someone I will be calling again to get another deal closed!
This house hack is a great example of using the Conventional Fannie HomeStyle mortgage to purchase and fully restore a century old 3 unit property to today’s standards. Minimum owner occupied down payment is 5% based off the total of purchase price + renovation cost. The buyer is required to live in the property for 12 months. Then after that time, all units can be leased out to tenants, allowing the buyer to do a repeat from BRRRR as an owner occupier again.
Purchasing as an owner who will occupy for the first 12 months can be helpful in that the minimum down payment is 5%. Purchasing as an Investor who will not occupy increases the down payment to 25%.
The buyer in this post is a licensed Real Estate Broker in Illinois very familiar with multi-unit properties. Please contact me if you would like to connect with the buyer.
Loan approval and terms are dependent upon borrower’s credit, documented ability to repay, acceptability of collateral property, and underwriting criteria. Down payment and terms shown are for informational purposes only and are not intended as an advertisement or commitment to lend. Please contact us for an exact quote and for more information on fees and terms. All loans subject to credit approval. Rates and fees subject to change. Not all borrowers will qualify. For licensing information, go to: www.nmlsconsumeraccess.org. 4305 N. Lincoln Ave., Office D Chicago, IL 60618
FCM NMLS ID 629700
Perry Farella 773 793 8803