Should I use a 203k to finance repairs?

[Andrew Futty]

I'm looking to purchase a home as a rental property that needs a decent amount of repairs, probably upwards of $20k, but I don't have the cash to make them after the down payment. I've heard bad things about 203k loans, but I am open to it if that is my only option. Does anyone have any experience working with a 203k or know of any alternative to financing repairs?

[Michael Noto]

@Andrew Futty If you go into the 203k loan process with reasonable expectations as far as the timeline from contract to close it will be a good experience.  People who do not take the time to learn the ins and outs of any process have unrealistic expectations and that leads to their frustrations, 203k is no different.

I have had several clients here in Connecticut that have purchased using a 203k loan, and from those experiences I highly recommend working with a realtor, lender, contractor, and lawyer/title company that have experience closing 203k deals.  Why?  They can prep you on how the process will unfold based on their experiences and most importantly they will know how the handle the bumps in the road that will inevitably come from purchasing a home through the program.

In the end, any client I have worked with that has done a 203k deal ends up satisfied because they created value  on the buy side and now have a house that is renovated with equity to spare. Focus on that throughout the process and it will get you through the frustrating days.