I am graduating from college this upcoming Spring and will be starting full time work in September. With the 3 months I have off for the summer, I am thinking of trying to find a duplex or triplex in the Minneapolis market to do a house hack. I plan to take the summer to renovate the property and find quality tenants.
With that being said, this would be my first purchase. I've read a number of articles and books and am confident that I have the abilities to pull it off, but the biggest question I have is on the financing component of the deal. Obviously, as a college student I don't have significant savings but I believe that I would be able to raise enough for a down payment of on a cheaper property in my market. However, the big question I have is how could I finance the repairs on this home? I would like to take a BRRR approach, but raising enough cash to purchase and rehab the property isn't possible for me. Would it be possible to receive a loan that would also cover the initial rehab costs, and then refinance after 6-12 months?
Any other general advice for someone in my position would be greatly appreciated!
An FHA 203k loan sounds perfect for you, but has some tradeoffs. Low down payment, repairs are bundled into the loan, only works for house hacking are some benefits. Lifetime PMI, more difficult to get your offer accepted as sellers prefer traditional financing or cash, have to do some extra work up front to price out the repairs are some drawbacks.
Refinancing out in 6-12 months I'll have to defer to someone with more knowledge to give advice on that.
Check out a nice quick post here for more info: https://www.biggerpockets.com/blogs/4380/39975-why-the-fha203k-rehab-loan-is-awesome-and-how-to-pull-it-off
Thanks for the feedback Oscar! I was actually just reading up on the FHA 203k loan program and was thinking that it also sounded like a good option, but I didn't know that piece about seller preferences towards the loan so that's a great piece of information to have.