Your experience using FHA 203K loan
Hello, I recently started learning about real estate investing and I'm considering buying a house Upstate NY that requires rehab using an FHA 203K loan. My intent is to move in with a 3.5% payment and improve the value then flip it 2 years later to use another FHA loan to buy a home, and begin investing out of state. What has been your experience using FHA 203k loans? Did you do a single or multifamily house? What kind of work can I do to add value to the house aside from adding a bathroom?
Also, feel free to correct anything I might have misunderstood about the process. Any insight is appreciated. Thank you in advance
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In 13' I bought a four unit building, all 2/1's with a 203k. All in around $360k, I did the streamlined version. So my repairs were only cosmetic, my value add was solving the issues at the property and filling vacancies.
I refi'd it two years later to get rid of PMI (monthly insurance on your loan since you're only putting 3.5% down) Its doubled in value and earns really well, what made it a great deal is the combination of the awesome financing to let a new guy get started and an awesome property.
Remember it won't turn a bad deal into a good deal if the property just sucks. Match it with a good place that fits your needs and it can be a new investor home run. The process was fun, but I wouldn't want to try it with a complicated property. You want to be in and out and off the banks radar and everyone paid asap with these things. Then use your own cash to get wild once they are gone.
I've also used this type of loan on a SFR conventional where I put 20% and got $60k to renovate my personal home. But I HAD to get permits etc, which was ok for me but again.. you're dealing with a third party who wants all the details. Its kinda annoying but worth it in the right scenario.
Both were fun, stressful and complicated processes but not that bad. Just a new aspect of finance and construction.