HUD 203 f project housing

[Nate Bartow]

Hello, I am currently looking at a property in Cleveland OH, 174 units, 111 of these are currently subsidized by either state or federal housing assistance. Does anyone have experience with HUDs 203 f project housing? The LTV is 90% which appeals to me quite a bit. Thanks in advance!

[Mike B.]

The point being made about the REAC is very important....for ANYONE thinking of getting into bed with HUD, please understand that there a ton of costs that are not even apparent until you are shelling out the bucks to fix things that really have no effect on the property or its ability to safely house a tenant.

And as far as a 90% LTV, be very careful about over leveraging in a market like Cleveland, especially when you are depending on the government to send the rent checks on time so you can make the mortgage payment. Depending on the housing office, they can be months behind in their payments (especially if coming from an underfunded local housing office in a poor market and highly saturated welfare climate like Cleveland) because they don't care if you have bills to pay. Oh, and they cannot be charged a late fee like a market rent tenant.

I don't mean to rain on the parade, but I have seen several people lose their shirt because they did not have the capital behind them to withstand these little known problems with the government subsidized housing that looks good on the surface.  Just go into it with eyes wide open.