FHA 203k loans for a first deal?

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As a new investor, I feel like the FHA/203k is the way to go for a possible multifamily house hack. I'm wondering if there is anything to stray away from or maybe tips/tricks? And when it comes to renovations do they have to be done by a contractor or can I do them myself? Also, how do I know what renovations are right for my area to force appreciation?

Hi @Joel Calkins , I just went through a 203k loan with one of my clients so I have a few thoughts for you.  

1. This type of loan isn't looked favorably on by sellers.  If you are in a competitive market, this could be a small issue for you. 

2. All work needs to be done by a licensed contractor (not the owner even if they are a contractor). There is a lot of paperwork involved from the contractor so not many will do the work. Talk with your lender to get a list of contractors they have worked with in the past.

3. When looking at what to update, look at comps in the area, and make your property look like those.  

HUD/FHA guidelines permit the borrower to do their own work as long as they are skilled, qualified, and have experience for the type of rehab the borrower wants to do.

However, 99.9% of lenders will not allow the borrower to do their own work on a 203k. 

Even if you could find a lender that allows "self-help" on a 203k, the amount of rehab money added to your loan is the same that a contractor would charge. Just in case the borrower is unable to finish the work, there must be sufficient funds in the rehab account for a contractor to finish it. 

So, while self-help on a 203k is allowed according to HUD/FHA guidelines, lenders really don't allow it.

I've always found if extremely beneficial to work with contractors on rehab loans that have the designation as a Certified 203k Contractor. They are found online at 203kContractors.com

To have a better idea of which renovations will force appreciation, check the comps in your area as well as local trends. In some areas, ADU's are popular and in others it's finished basements.