203k Streamline Loan

[Barshay Graves]

Any advice on purchasing an investment with this loan? Horror stories, success stories??

[Kyle Gregg]

I am also looking into the 203k loan and have done a lot of research. From what i read, you need to have a STRONG grasp of all concepts and steps in the loan process.

In order to have a successful journey, you must have a good lender that is very familiar with the 203k loan. If you start with a solid lender, they will have contacts with approved contractors and HUD consultants that will guide you in every process. Without these key team members, you'll be posting your horror story on BP. Your contractors MUST be approved. You will waste a lot of your precious time dealing with non-approved contractors.

Having a good reserve of cash throughout the process is very important. I know most people turn to the 203k for the fact that its only 3.5% down payment and that it covers the house purchase and the renovations...thinking that you can get by with little money...I think this is a wrong view on this loan. Having extra money on hand will allow you to solve unexpected problems with ease. Since this loan is based on the fact that the house WILL need renovations, you have no idea what you will run into. Even with a good inspection and a thorough scope of work, there WILL be extras and they WILL cost you money.  

Finding the right property that will create your desired outcome, whether its breaking even, positive cash flow, creating equity, etc...Buying a house that will not produce your numbers will leave you in a tough spot post renovation. Know your market and know what will rent. You dont want to end up with a fourplex with one bedroom units in an area mostly populated with families. I have been looking for properties in areas with good schools. Depending on what you buy, this could be a huge bonus to reduce tenant turnover. 

Like i said, i am in your position looking for others with 203k experience since i have none of my own. All i have is a lot of research.

Good Luck!