Should I FHA 203k or Hardmoney

5 Replies

Hello BP Fam,

Im in Atlanta,Ga. I found a property today. It needs work. So I was looking to get a FHA loan and house hack it. Listed price is $145k Arv $180. It needs about $20k in work. Could be made into a duplex. 3/2 upper 2/1 lower.

Brand new to the investing game and trying to figure out which way to go?!

Also are there any FHA mortgage lenders here?! If so let me know!

Thanks in advance for your help!!

This is not a good deal. You don't know me, but if you were my best friend since first grade, I would tell you to keep looking. Especially, if you don't have the cash to buy it and rehab it. Listed price means absolutely nothing. This price is what they want, not what they will accept. Find a better deal. Being an investor is different than being a buyer. Don't be a buyer.

I have been considering the FHA 203k loan as well but after listening to the BP Podcast with Meet Kevin from youtube I changed my mind. He brings up a good point that after paying HUD consultants and extra fees that add up to thousands of dollars the 203K just isnt as good of a deal. But the thing that really changed my mind is how long of a drawn out process it can be because of long escrow holding times and inspections between each contractor in order to receive the next draw. Time is money in the game and in the market I am in and there just isnt enough time to mess around with the 203k loan.

Now Hard Money may be an option for you but I dont believe you can owner occupy a home that has hard money at least witht the HML lenders I have used this has been a strict concern they have because the lender will be in hot water if you move in. So you wont be able to occupy until after you have repaired the property and refinanced. If you can find a good enough deal that you have 20% equity in after repairs then you can refinance and not have any money left in it.

With the numbers you have listed above that wont be the case.

$15k spread before fees, commissions and closing costs?

Sounds like the seller and lender are the only ones making money.

You’d be losing money. Probably offer no more than $100k on that deal.

As others above said, those numbers don't pencil and hard money typically won't give you more than 75% of ARV which only gets you a 135K loan.That's a lot of money you'll have to come to the table with and that's if you're correct on your rehab.

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