There’s a new investment strategy that has become popular recently: buy a multi-unit property with an FHA reverse mortgage, live in one unit while renting out the others, and NEVER pay a dime towards your monthly principal or interest – with a reverse mortgage, of course!

FHA now permits seniors 62 years and older to purchase residential real estate using a reverse mortgage. Until recently, reverse mortgages insured by FHA were only available on homes already owned and occupied by eligible borrowers. Beginning this spring, the agency allows you to buy a duplex, tri-plex, or quadruplex - using a reverse mortgage.

Read the example of a married couple in their early seventies who sold their home in Reno late last year for about $850,000. They're now looking at a $500,000 tri-plex, with the idea of living in one unit, and renting out the other two for about $1,300 a month each.

To qualify for FHA's new “home purchase” reverse loan, they'll take a portion of the sale proceeds from their previous home, and make a 35 percent downpayment on the tri-plex. Then they move into the unit they've chosen for their own personal use, and rent out the other two units for a combined $2,600 a month. Since it's a reverse mortgage, the couple never will have to make a principal or interest payment.

They've got positive cash flow every month that they can use for living expenses, and with any luck, they'll own an appreciating asset that may be worth more in later years.

Plus, if and when they choose, they can refinance the property, pay off the reverse mortgage debt, move out and convert the unit into all-rental so the entire building is investment property, and make it eligible for a 1031 tax exchanges.

As always, before plunging into a strategy like this, get solid advice from an experienced professional. And for professional rental property management software that's easy to use, try Simplify'Em Property Management Software.