CENTINNIAL POST: To live in a 203k loan property?

15 Replies

Hi all, i decided to use my centennial post to ask about Fha 203k loans.  I'm planning a house hack (live in in my multifamily) and am looking at dilapidated/distressed properties.  The 203k will help me fix it but would I have to buy with a live in ready apartment? What basics are nonnegotiable? Ie if I want to take a shower I have to have a water heater? Any thoughts.

FHA guidelines say you must occupy the property within 60 days of purchase, which should give you ample time to repair/replace the necessary mechanical systems to make the house habitable.

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Thats for a standard FHA loan. A 203k loan is very different in terms of timelines. I am currently using a 203k loan to rehab a house that i will be living in and i was given up to 6 months to rehab and move in. Let me know if you have any specific questions about the 203k.

Angle, 

My husband and I did this with our house.. However, we lived in it with no running water, no heat, and no walls through a winter. Talk about house hacking! But we were able to do this because we did a contract with the seller as a rent to own. He gave us a year to make it "livable" by bank standards. We found a community bank who told us if we had running water and one usable bathroom, a heat source, and the drywall up with the walls primed it would be considered livable. We were able to do that within the year and then got a 203(k) loan to finish the rest. Would the seller be willing to work with you on that? Maybe you don't need a year, but 6 months. The seller makes some money, you save some money, and you get the house. Good luck!

Liz

@Liz Rogers

very interesting way of going about doing a rehab. did you have to move into the house at that time? forcing you to live in a rehab? a full 203k would have done it all regardless of existing conditions. 

Kindky send me some info re. 203 loan. I bought a shell and goal is to fix and rent/ hold. I'm looking at different options to finance construction. Construction loan vs 203. Thanks. 

@Kyle Gregg

Yes we did. It is a long story but we were living in Louisville and commuting to Lexington to work. We were not eligible for financing for the amount of money we needed at the time so that was another reason for the 1 year deal. Plus we were originally working with a commercial bank who was not very helpful and we did not get to the community bank until the end. We decided to move into it to save money to throw at the renovations and work on it pretty much 24/7! 

Liz

@Jem J.

first off, a 203k is a product offered by FHA. FHA requires that you must live in the property for a minimum of 1 year before refinancing out. Take that into consideration. it might now work for you if you are planning to rent it out.

@Kyle Gregg Thanks for the six months timeline. That makes more sense, I couldn't imagine moving into a fixer upper within 2 months especially considering the fixer upper I'm thinking about purchasing. And this question came to mind knowing that the FHA inspectors have to come out and check each disbursement. I can't even imagine how long this would take.

@Liz Rogers  I'll say you have some that grit that's necessary to be a successful investor.  Unfortunately, I don't think I'd be able to do that considering I have a 3 year old and a wife who would not be happy with buying the fixer upper.

@Angel Rosado well to give you an idea, i am doing a complete gut job on a 2bed 1 bath townhouse and were hanging drywall a month in. I figure another 2 months for finish work. 3 month total. depends on a lot of other factors though. 

@Angel Rosado

It was definitely an adventure! And we learned a lot! I would definitely look into a community bank though... Ours was SO MUCH MORE FLEXIBLE than the commercial bank we worked with and they did not send any inspectors out when each job was completed. We took pictures and they were fine with that. Plus we go to do the work ourselves instead of having to have a contractor do it all. 

Liz

With a 203k streamline, under $35k, there only two draws, 50% up front, 50% upon completion, inspection upon completion.  You must use a Lender approved GC.

@Wayne Brooks

This info is very useful. Do you have experience with 203ks? is it difficult to find approved GCs?

Originally posted by @Liz Rogers:

@Angel Rosado

It was definitely an adventure! And we learned a lot! I would definitely look into a community bank though... Ours was SO MUCH MORE FLEXIBLE than the commercial bank we worked with and they did not send any inspectors out when each job was completed. We took pictures and they were fine with that. Plus we go to do the work ourselves instead of having to have a contractor do it all.

Liz

I want to do some of the work myself but never living in a home puts me at a slight disadvantage and want to know that I have a GC when I need her/him.  I totally agree to go with a community bank, I am staying away from the Mega banks like they have a plague. 

You won't be able to do the work yourself with a 203k, you must use an approved GC.

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