Residential-Commercial Remodel-Miami, Florida

HUD Regulations Allow Seven Housing Units Per Area, Per Owner

December 1st, 2011 |

Author: rasp

Seven Unit Limitation:

HUD regulations and policies state that a real estate owner should not be allowed to accumulate FHA insured properties that constitute a multifamily project. In general, a borrower may not have an interest in more than seven rental units within an immediate area. HUD defines an immediate area as properties being within a two block radius.

The seven unit limitation does not apply if the neighborhood has been targeted by a State or local government for redevelopment. The State or local government has submitted a plan to HUD that defines the area, the extent and type of redevelopment in the target area. A restriction may still be imposed within a redevelopment area to prevent undesirable concentrations of units under a single or group ownership. HUD will decide that the seven unit limit is inapplicable only if the real estate owner will own no more than 10 percent of the housing units in the designated redevelopment area or sub-area and the real estate owner has no more than eight units on adjacent lots.

What this means is a FHA 203K loan can be something that a real estate investor could use to enhance his or her real estate portfolio. In addition a family that is house hunting should certainly investigate the advantages of a FHA 203k loan.

I think there are some people who do not understand the difference between the Federal Housing Administration, FHA and Hosing and Urban Development, HUD. FHA is a federal agency and part of HUD that provides mortgage loan guarantees.

FHA focuses on single-family housing through its mortgage insurance program, HUD ‘s focus is on community planning and development. These programs can be funded through grants or HUD’s own mortgage insurance products for the development of multifamily housing and public housing.

Many years ago I was involved in the development of a HUD project. It was a low-cost housing project here Miami Florida, HUD 527. This project was a low-cost multifamily project with a number of unrelated and different sites throughout the Miami Florida area.

So in summation HUD’s job is community development and redevelopment while FHA, a part of HUD is primarily involved with single family homes-home owners. Although HUD does issue grants for development and redevelopment, mostly low-cost housing, neither agency is a direct lender. They both are guarantors of mortgages or development money.