First time investment financing ???

10 Replies

I am a first time investor, and my realtor suggested financing using the FHA 203k program.
Is this a good idea ?
Or are there better options ??

@Jimmy Warr

That financing is not meant for investors, it is meant for people who are going to live in the home.  If your Realtor suggested you consider this financing for investment property you should find a new Realtor. 

If you plan on using financing for investment property you will need to put down 20% + closing cost unless you find a good enough deal to use hard money to refinance. 

Good luck

Curt Davis, Real Estate Agent in TN (#00321765)

Wow !!!
I did my research on that program and it did seem sort of fishy, But I had to ask BP.
I am here in the Memphis TN area with limited funds but extreme passion.
Investing in Real Estate is the only option for me!
With only 3k in reserves, in your opinion will hard money lenders actually lend to me?

Originally posted by @Jimmy Warr :

I am a first time investor, and my realtor suggested financing using the FHA 203k program.
Is this a good idea ?
Or are there better options ??

You can use the 203B, you'll just have to live in the investment house for at least a year... buy a duplex, triplex, or 4plex... live in 1 unit, rent out the remaining units.

I am looking to rehab and Flip.

If you're an investor looking for financing on a rehab and flip I suggest a hard money lender. There are many out there. While more expensive the ease of the getting the loan to do what you want to do could be worth the cost.

@Jimmy Warr  

The 203k is a great program for first time investors.  While it does come with a 12 month "live in" period, you do need a place to lay your head.

I'd take your 203k loan to a 3-4 unit property in rough shape.  Use the rehab section to fix up all 3 units.  Convert them to condos, live in one for 12 months, and sell the other 2.  Combined with a full time job, this should leave you with an inexpensive place to live and a paid off property.

If you want to move onto another property, sell the last unit and use that cash as a down payment on another place.

@Jimmy Warr good news with a HML or private lender is that they are very interested in the collateral vs the borrower (borrower is important too) when considering underwriting the opportunity. If it's a killer deal , you will find money for the deal. If you are not able to negotiate a loan then you may offer to joint venture with an investor if you have the skills to get a rehab done. As @Curt Davis mentioned above, your best opportunity to make this happen is based on relationships that can be fostered at your local REIA. Good luck!

This site is completely awesome. The advice here has been very helpful.

@Curt Davis I actually went to the MIG meeting in October & Have every intention of being there Thursday. :-)

Does anyone have any ideas of any Hard Money Lenders that would be willing to lend to a newbie. ?