I am a newbie looking into getting a triplex multifamily property. I currently live in IN, but looking to buy property in Chicago, IL. Should I look for lenders in IN for a FHA 203K loan or in Chicago? How should I go about finding a lender and what other advice or guidance would you give on the situation?
Professional · Chicago, IL · Member since 2012 · 197 posts · 131 votes
9y
Guaranteed Rate does FHA 203K loans. Keep in mind if your doing an FHA loan their are owner occupancy requirements. You must live in the property. So if your intent is to move to Chicago from Indiana to live int he property you are rehabbing, then you should do that type of loan
Lender · Chicago, IL · Member since 2017 · 438 posts · 193 votes
9y
Chicago is definitely it's own animal....I highly suggest using someone local that knows the ropes. And aside of someone that is an expert in this market, also should be very well versed in multi-fsmily lending AND renovation.
Real Estate Agent · Chicago, IL · Member since 2016 · 283 posts · 71 votes
9y
@Account Closed would definitely look for someone in Chicago and a lender that is used to doing these loans. I have a great person who works exclusively on these kinds of loans. Will send you a PM. Where in chicago are you looking at? The biggest hurdle I find for these deals are the contractors themselves. There are lots of leaps and bounds to getting a 203k but is a great tool at the end of the day. However the contracting piece can cause a hold up paperwork, permits etc. I have a great team for this
Professional · Chicago, IL · Member since 2012 · 197 posts · 131 votes
9y
Guaranteed Rate does FHA 203K loans. Keep in mind if your doing an FHA loan their are owner occupancy requirements. You must live in the property. So if your intent is to move to Chicago from Indiana to live int he property you are rehabbing, then you should do that type of loan
Flipper/Rehabber · Crown Point, IN · Member since 2009 · 482 posts · 216 votes
9y
Syed has an excellent point. You didn't mention if you were going to live in the property or just purchase one. If you don't live in it, a 203 isn't available. We offer multi units in the south suburbs of Chicago. If you need a contractor, be very careful. Finding a quality contractor is a massive job. That was our biggest hurdle in the business! It took a long time to find someone who was honest and did quality work, on time and at a fair price. Best of luck to you.
Chicago, IL · Member since 2016 · 9 posts · 7 votes
9y
Shuatequa Johnson if you won't owner occupy then I believe you'd have to do a conventional loan (10-20% down) pay with cash, or use hard or private money. I would steer clear of hard money if you haven't vetted re-fi lender options thoroughly because you'll need to have an exit strategy from the hard money loan.
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
9y
Originally posted by @Account Closed:
Hello BP,
I am a newbie looking into getting a triplex multifamily property. I currently live in IN, but looking to buy property in Chicago, IL. Should I look for lenders in IN for a FHA 203K loan or in Chicago? How should I go about finding a lender and what other advice or guidance would you give on the situation?
I think you got your answer regarding not being able to use a 203K loan unless you're planning on living there. If you're only looking at properties that require renovation then they probably won't qualify for conventional loans backed by Fannie or Freddie. You'll have to use private or hard money or find a bank that specializes in those situations. In any case I'd do the following:
Pull your own credit first. Make sure you know your Credit score, Debt To Income Ration ..... You should have this info available so you can minimize unnecessary credit inquiries. W/ the info in hand a lender should be able to tell you if you qualify w/ them & how much for. Eventually they will run their own credit check but don't agree until you find the right lender or 2
Make sure you understand where the lender will do business in Chicago - There are some local lenders that only lend in specific neighborhoods. Worst thing you can do is get qualified for a loan then choose a property in a location that the lender won't touch.
Ask if you'll need an LLC for the loan. Many of the licensed Hard Money Lenders can only lend to LLCs. You still have to provide a personal guarantee.
Alternate exit strategy- Since you're considering a multifamily should get in contact w/ lenders that will refinance you out of a hard money loan into a conventional loan. Make sure you understand their requirements for refinancing & seasoning of the property.
Lender · Chicago, IL · Member since 2017 · 438 posts · 193 votes
9y
You will be looking at 25% down conventional, unless you live there. We have 20% down investor options, but at higher rates. Normally though lenders require 25% down.