Hello everyone , my name is Joe and I’m just getting started into buying distressed home and flipping after Reno’s. My question is ... I have The liquid cash for purchase , I dont Have the liquid cash for renovations .
Is a 203k loan for me ? Does that get added to the mortgage ? Or do I have To pay the Reno money out and a 203k pays me back in installments ?
thank you in advance
Hi Joe, welcome to BP!
203k or other renovation loans like it are great for wrapping in renovation costs into the mortgage. As long as you plan to occupy the property, it’s a great product to use for a live-in flip property where you can build a respectable chunk of equity!
The way a 203k works is you use your contractors proposal as the added reno cost tacked onto the mortgage.
That money goes into escrow, and gets released in draws throughout the project after your 203k hud consultant comes in to make inspections.
It’s a great way to minimize your out of pocket costs while maximizing the possibility of equity returns!