Investor · Portland, ME · Member since 2014 · 14 posts · 5 votes
Hello...
I plan on using a FHA 203K loan to start my real estate investing business due to lack of capital for a 20% down payment plus rehab costs. My initial plan was to purchase a 2-4 unit multi-family, live in one unit, fix-up the property, and move out at some point in the future.
Should I also consider this strategy with a single family property? In this scenario I would fix it up and live in it until enough equity is built up to refinance. I would then rent out the house and purchase another property (single or multi family) to repeat the process.
How long would I have to live in property #1 before getting out of the FHA loan and is this a viable plan to get my foot in the door?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
I suggest you first find a lender doing 203Ks, from a lender's point of view they aren't popular. You'll need to stay in property # 1 for at least a year.
Your second will be tougher, if it appears you're forming a pattern of investing you'll likely be denied. There needs to be a reason for moving, like change of job to another area. You won't be knocking out owner occupied loans on duplexes as a business model IMO. :)
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
I suggest you first find a lender doing 203Ks, from a lender's point of view they aren't popular. You'll need to stay in property # 1 for at least a year.
Your second will be tougher, if it appears you're forming a pattern of investing you'll likely be denied. There needs to be a reason for moving, like change of job to another area. You won't be knocking out owner occupied loans on duplexes as a business model IMO. :)
Specialist · Marlton, NJ · Member since 2014 · 92 posts · 55 votes
12y
Hi John-
I am a BP member but I am also a lender and I specialize in the FHA 203k. 203k's can be a little but work but using them in the right situation can be a home run for you. I have had dozens of clients who bought homes correctly- below value- and added work the the projects and at closing there homes had anywhere from 10K to as much as 120K in instant equity. It doesn't happen all the time but it does happen.
FHA does not want to see that you are using its programs "to acquire properties"- basically saying they do not want you to use this to build your portfolio but if done correctly it is a great option for individuals looking for a low down payment way to start investing for there future.
I always say to my clients that had I know about this product when I was young I would have amasses a lot of properties and used it to its potential.
Good luck and feel free to PM me for any advice about you specific situation. If you do go this route just make sure you work with a lender who specializes in these programs or you can get taken for a ride.
Clearwater, FL · Member since 2014 · 42 posts · 4 votes
12y
Hi @Account Closed I actually have the same exact plan as you currently also as a first time investor. Just thought it was cool to find someone interested in the same thing considering the internets a huge ocean sometimes. I also plan on moving back to my home state of Florida, Tampa Bay Area, to start my investing career.
Investor · Portland, ME · Member since 2014 · 14 posts · 5 votes
12y
@Jeff Onofrio Thank you for the tips. I have two lenders in my area that offer the 203K that I'll be meeting with this week. Have you worked with folks using this loan for mult-family properties before?
@Account Closed Awesome! Best of luck. Tampa is a great area to live, and I'm sure there are solid areas to invest.