Considering a House Hack

8 Replies

I am considering buying a live-in flip in Florida with the intent to buy, rehab, live-in and sell.  To avoid tying up cash I can leverage for other flips, I am contemplating financing the live-in.  I am hoping there are some house-hacking or lending gurus here that could provide some expertise with respect to funding this project.

I am aware the 203K loan is potentially an option due to the condition of the homes I will be looking at.  Are there any experienced 203K users/lenders out there who could speak to the requirements, pros/cons, etc. of this product?  Further, are there any other financing options I should be considering?

Thanks in advance for your thoughts and suggestions.

Hey Benjamin, have you thought of find an area were USDA loans are accepted? 100% Financing, I know of another such lending option without the geographic restrictions but there are certain thresholds to meet. 

@Benjamin Ervin - The great part about a "live in flip" is that you are living in the house while you are making repairs. If you do a 203k loan, you are not allowed to do the repairs. It will need to be licensed contractors that your lender approves. 

Rather than do a 203k loan, I would suggest either a 3.5% FHA loan or a 5% down, owner occupant conventional mortgage. That way you can do your own repairs while living in the property.

Originally posted by @David Baier :

Hey Benjamin, have you thought of find an area were USDA loans are accepted? 100% Financing, I know of another such lending option without the geographic restrictions but there are certain thresholds to meet. 

David, I am aware of the USDA loan.  In fact it is how I bought my current primary residence.  The issue there is going to be the condition of the fixer upper type properties I am interested in for the live in.  I'm not convinced I can add enough value to make this worthwhile unless I am buying an at least moderately distressed property. 

Originally posted by @Craig Curelop :

@Benjamin Ervin - The great part about a "live in flip" is that you are living in the house while you are making repairs. If you do a 203k loan, you are not allowed to do the repairs. It will need to be licensed contractors that your lender approves. 

Rather than do a 203k loan, I would suggest either a 3.5% FHA loan or a 5% down, owner occupant conventional mortgage. That way you can do your own repairs while living in the property.

Craig, I think I can still make it work with an approved GC if I buy right.  I am however a little confused about the difference between standard and streamlined 203K options, and when you can and cannot occupy the residence.

I haven't ruled your suggestions out, but as I mentioned to David above, I am concerned the types of moderately (or worse) distressed properties I am looking for will be tough to qualify for a standard FHA loan. Additional to that point is the benefit the 203K provides in not tying up any cash reserves that would otherwise be allocated for the rehab.

Originally posted by @Craig Curelop :

@Benjamin Ervin - I have no qualms against the 203k loan. It's great! I just wanted to make you aware that you not be able to do your own work with it. If your plan was to hire it all out, then you can ignore my comment and proceed :). 

 Craig, have you used a 203K before?  If so, do you know if the approved GC is able to hire out any subs of his choice, or will they have to be lender approved, as well? 

Originally posted by @Maurice Lightner :
I live in South Florida and I was wondering what companies offer the 203K loan? Could anyone tell me more about the USDA loan?

 Hi Maurice, there are a lot of great companies that offer 203K loans. I would consider talking with a few different companies and mortgage loan officers as they will be able to give you more insight. By speaking with more than one company you will also be able to see what the competition is looking like.