I have a four plex(Minnesota) that was signed this weekend, and inspection next weekend. I am looking for advice regarding the loan strategy.
4 units in total, 1 vacancy
1. Take a 203k FHA loan, and the 5.5% interest rate to renovate all units.
2. Decline 203k FHA loan, and get a loan from a bank after closing, renovate units as tenants leave.
I have never gone through a 203k process, and am not sure what the best option will be.
This also leads into if I should evict all the tenant (3), renovate all units before closing, and then post for tenants, or decline the 203k and renovate as vacancies open.
Not sure on which approach to take here, and really need some advice.
List of items to be done - (inspection next weekend)
Air Conditioner addition to current forced air furnace
Garage door motor to 1 car garage door
Install recessed lights in living room, and new light fixtures in bedrooms, living rooms, kitchen
Replace light switches/outlets to square plastic white
Remove carpet, tack boards one main floor and top floor
Install vinyl plank flooring throughout main floor
Paint all wood trim white
Paint kitchen cabinets white
Paint all walls
Remove half of kitchen wall
Sliding door for half bath on main floor
Replace kitchen counter top, and match bathroom vanities with same
Replace kitchen sink
Replace appliances with stainless steel
Replace countertops with same kitchen counter material
Install window blinds on all windows
@Arvin K. You didn't mention whether or not you plan to live in one of the units in the 4-plex, but I imagine you are or you wouldn't be able to finance with a 203(k) loan.
I guess a lot of it depends on whether you have the funds to do the renovations without the loan, and whether you want to do some of the renovation work yourself?
If you do have the funds, and want to do some of the work like installing flooring, painting, etc. yourself, I would skip the renovation loan and additional requirements that come with it and keep things simple.
If you don't have access to additional funds and don't have the ability or desire to work on the property yourself, and the property won't qualify for regular financing without some of the repairs, then I would definitely recommend the 203(k) loan.