Fha 203k loan for multi-unit

6 Replies

Hi!

Is anyone familiar with the process of an fha 203k loan and has experience? Just curious on what your experience was like because i want to use this to acquire my first rental property and I’ve been doing a lot of research on it and this seems to be the best strategy for me starting out.

Hopefully someone replies because i don’t see posts on this topic

Hi @Tyana Blackledge , I don't have any experience with a 203k loan with multifamily but I would reach out to a few lenders and get their take on it. Just know that not all lenders work with 203k loans but they are more difficult. The one issue I see is that because the work needs to be completed within a set timeframe, it might be extremely difficult to do that if the other units are occupied. It might be better to look at creating an ADU in a single-family home.

@Tyana Blackledge

I've been a part of many 203k's (most of them successful). Here are some basic "just starting" tips. 

Start interviewing people to be a part of your team - Realtor, Lender, and contractor.

Realtor - should not be afraid of the 203k, but doesn't need to be very experienced with them

Lender - should have verifiable experience with the 203k; does not need to be a "local" lender; HUD has 2 lender databases where you can find the most experienced 203k lenders. The Lender also is responsible for selecting your HUD approved FHA 203k Consultant.

Contractor - needs to have 203k experience or at least 203k education along with sufficient financials to afford the start up costs and ongoing expenses on 203k projects; best to use a contractor who has the accreditation as a Certified 203k Contractor

There is a great FAQ for the 203k on that 203k Contractor site that actually discusses the recommended steps for a successful 203k.

203k's will take an extra 15-30 days to close but are quite easy to do with the right people helping you. So, spend a lot of time on this process. 

You're only as strong as your weakest link ... select your partners wisely. 

Hope this helps!

Hey @Tyana Blackledge ! I’m currently in the process of closing on a 203K loan standard for a duplex and it has not been fun. I’m a very newbie investor but I saw the value in wrapping the purchase and rehab into a loan mainly because it would have taken forever to save the amount of the cost of rehab. I’ve been in contract for 78 days (and counting, was due to close this afternoon but the bank delayed the closing, definitely hurt) 


a few things I’ve learned already and would do differently:

•definitely only move forward in this process with an already licensed contractor who is organized with paperwork and such

•if possible, get in touch with multiple lenders that are currently doing 203k loans

•find a lender that has an experienced 203k loan team and ask about appraisal and underwriting timelines (has caused huge delays for me) 

•patience is an understatement (still struggling with this myself haha)