Can I roll rehab cost into FHA loan?....other financing options?
Hello!
I'm currently looking to put an offer in on a triplex. It has two 2 bedroom units upstairs, and then the walkout basement currently has another 2 bedroom unit it half. The other half of the basement is unfinished but can be turned into a 1 bedroom unit. There are even unfinished studs in place to turn this into a 1 bedroom unit.
This would be my first deal and I plan to house hack and live in one of the units (the other two units are rented). I would like to finish the basement and rent it to live for free versus paying rent to myself. The current plan is to do an FHA loan on the house with 3.5% down. I'm getting married in October, so I'm trying to keep as much in my bank account as I'm going into this next stage of life. Because of this, I was wondering if I can pay more for the property and have the seller essentially write me a check for the additional pay.
He's asking about 155k for the property. Can I instead make my offer for 175k and then have the seller write me a check for 20k? This would go towards my closing costs and then the rest would go towards fixing up the 4th unit to rent out. Is this legal? If I make the mortgage company aware of my plans, are there any concerns? I don't have the cash to make this refurb on my own, so looking at ways to make it happen.
On a similar note, any ideas for creatively financing the house with different means? The property is for sale by owner and recently taken off market due to many people low balling him and not seeing eye-to-eye on the price. He is an older gentleman and this sale is part of his retirement package plans. He does not own the property free and clear. The auditor website shows he purchased property for 135k in 2005. I've read a lot and listened to a lot of BP podcasts, but not sure what financing methods might work here (if any) or if FHA is the best option. Subject to financing? Perhaps something else? Maybe if I give him the downpayment directly, I could get a better deal by making payments to him each month? Not sure what could be applied well to this situation that is a win for both parties.
Thanks,
Nicholas