Anyone ever used 203k loan in Texas?

Buying & Selling Real Estate
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Anyone ever used 203k loan in Texas?

Juan Campos
Dallas Tx · Member since 2021 · 112 posts · 31 votes

Hello, my name is Juan I have been studying realestate investing for about a year now, and have decided to pursue this as my lifes goal, I recently found out about the 203k fha loan, and I have decided to invest in my first property, I am in the Dallas Texas area, ( a very competitive saturated market )

I want to buy a multifamily unit (duplex) and use the 203k loan to renovate it increasing equity up to 20% in order to immediately refinance into a conventional loan ,pull a heloc and invest in my second property, I understand I need an exit strategy and I am currently working on that as well,but I believe I will develop that as I grow and dive deeper into this, I've never bought a home I'm still learning how to calculate numbers, if any of you have done any 203k loans do you mind sharing some information? What is your opinion on this strategy, and do any of you know any lenders thst specialize in 203k loans in the Dallas ft worth area ?

Thank you

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Eric James
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
5y

Make sure you read up and understand the whole process. In the end, you still need to find a good deal. You don't want to go through all the work and have your costs equal the market value. Your purchase price plus reno costs still need to be much less than the ARV.

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  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Paul Welden

    May I ask who has lr provides this 10%-20% cushion reserve

    The bank?

    0Reply
  • Harrison Sharp
    Real Estate Broker · DFW · Member since 2015 · 350 posts · 270 votes
    5y

    @Juan Campos working on one with a client right now

    0Reply
  • Paul Welden
    Real Estate Agent · Tempe, AZ · Member since 2011 · 1k+ posts · 543 votes
    5y

    @Juan Campos

    The 203k Consultant determines the amount of the CR and whether it’s 10%, 15%, or 20%.

    1Reply
  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Harrison Sharp

    Are you a lender or investor and how is it going so far ?

    Do you know any gc 🤔

    0Reply
  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Paul Welden

    This contingency reserve who provides it, the bank? Me? Sorry I got a bit confused here

    0Reply
  • Paul Welden
    Real Estate Agent · Tempe, AZ · Member since 2011 · 1k+ posts · 543 votes
    5y

    @Juan Campos

    The CR is added into the loan amount. So the borrower ends up paying for it just like the borrower ends up paying for the renovation.

    1Reply
  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    5y

    @Juan Campos thanks for posting.  Sorry I'm just catching this now but if you ever want to just target Texas people then feel free to post in the Texas forum.  Lot's of us monitor that one pretty closely.  Anyway, are there any other questions you have about this loan product?  Can certainly answer very specific questions if you still have any.  Thanks!

    1Reply
  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Paul Welden

    On a 200k property around howmuch should I have to make sure I have enough for closing costs and down payment

    Great credit

    Looking to do a 203k fha 3.5%

    I'm not looking for exact numbers just ballpark estimates

    0Reply
  • Paul Welden
    Real Estate Agent · Tempe, AZ · Member since 2011 · 1k+ posts · 543 votes
    5y

    @Juan Campos

    3.5% for down payment

    2-4%for closing costs

    1-2% for soft costs such as inspections, 203k consultant fee, contractor estimate fees, etc.

    1Reply
  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Andrew Postell

    I didn't know there were specific sections i could post based on state, I should definitely go ahead and post it there, I'm just wondering on average howmuch I should have on my bank account for a multy family property at 200k or under 200k

    I plan to use the 203k fha 3.5%

    But in the next 6 to 12 months it's a crazy market right now. Here in tx

    I still haven't found a solid lender specializing on 203k loans Or an agent

    Everyone says they do them but no one specializes in them

    I don't just want to go with any agent or.lender

    0Reply
  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Paul Welden

    So for a 200k property I would need around 20k total ?

    Is there a way to roll closing costs into mortgage ?

    0Reply
  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    5y

    @Juan Campos. Please double check if you can use family and friends to do the work. I believe the GC will source the subs and the GC needs to be approved to receive 203K funds.

    1Reply
  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Lucia Rushton

    For sure, do you know any lenders specializing in these type of loans or any gc?

    0Reply
  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    5y

    @Juan Campos you are certainly correct - not only do these loans get complicated in a hurry it's hard to find people that specialize in them.  I'll send you a PM with some suggestions here.

    With the 203K loan, the theory is that you will be buying a property that is in desperate need of work.  If you find a property that just needs cosmetic work....then that will likely get overbid by everyone else in the area.  So if you do find a property that needs considerable work that means the seller can't get a traditional buyer - so your offer might stand out since other people would be lowballing the offer.  That's the theory at least.

    To calculate how much you need in your bank account I would estimate with 3 items: down payment, closing costs, and reserves.

    1. Down payment - pretty easy at 3.5% = $7,000

    2. Closing Costs - you'll likely be paying the seller's costs here too, so estimate about $10,000

    3. Reserves - you'll be required to have 3 months of reserves at a minimum with a multi-family property - so an additional $5,000 or so

    So a total of $23,000 - somewhere in there.

    It sounds like you might have a property picked out already?  Feel free to ask anything else if you need.  Thanks!

    1Reply
  • Matt Bishop
    Rental Property Investor · Dallas, TX · Member since 2020 · 50 posts · 41 votes
    5y

    @Juan Campos, can you please share with me, who you know will build in DFW? I found a perfect lot to build a four-plex and I need a general contractor.

    0Reply
  • Dane Ohlen
    Investor · Richardson, TX · Member since 2016 · 46 posts · 12 votes
    5y

    @juan Campos , I have done 203k rehabs and I honestly wouldn't even want to do another one with how busy I am. If I did bid one, I would charge a premium just like any gc with any experience would as well. Depending on project scope gc would either to have to float large amounts or do several draws which are time consuming. I also think if you buy on market it will be nearly impossible to get a good deal. Most buyers are paying cash and no one wants to accept an FHA offer in this climate.

    0Reply
  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Dane Ohlen

    I plan to buy in 6 to 12 months a lot can happen, are you a gc?

    0Reply
  • Juan Campos
    OP
    Dallas Tx · Member since 2021 · 112 posts · 31 votes
    5y

    @Matt Bishop

    Nice and yeah no problem message me

    0Reply
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