203k advice for a 1st time investor
Rental Property Investor · Member since 2019 · 12 posts · 5 votes
203k advice for a 1st time investor
Most Popular Reply
Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes@Brandon Dubisky a couple of pointers here.
- Post in the Alabama forum to see if any good locals would have recommendations for you. Usually there's good people who monitor the state forums. Might be a good place to start.
- You can certianly use a 203K loan but as mentioned above a Fannie Mae HomeStyle loan will be a good option as well. A lot less paperwork to go through and the loan is easier to navigate as well. With FHA loans it is CRITICALLY important that you use a lender that offers BOTH FHA 203K types - meaning, "Streamline" and "Full". Using a lender that only offers one will crush a deal for you. So while there may not be a "preferred" lender....just make sure that your lender offers both.
@Randy Janoe thought this might be good for you too if you are interested. Here's some quick pointers on both loan types:
Important Items to know about FHA Renovation Loans
A FHA option to roll renovation/repair work into the loan. Down payment is based on the total of the purchase price + renovation costs. Loan can go slightly over appraised value if the need were to arise.
1.“Streamline Option” – or “Limited Repair Program”
- a.Total financed rehabilitation costs cannot exceed $35,000
- b.Maximum Sub-Contracts is 3
- If more than 3 are needed then a General Contractor will be required
- c.Repairs are limited to cosmetic repair only. Structural repairs are not allowed, such as room additions, foundation repairs, etc. Pools are also not permitted with Streamline Option
2.Full Repair Option
- a.Minimum of $5,000 in improvements
- b.203k Consultant is required
- i.FHA Approved Single Family "construction manager" who oversees and inspects the rehabilitation work from start to finish
- c.Nearly any type of repairs is allowed (luxury items are not). Pools are permitted.
- d.Maximum $75,000 in repairs or 50% of the after repair value, whichever is lower
Contractor Approval
- Contractor must be accepted prior to final approval and be responsible for the entire project. Multiple sub contractors with multiple separate contracts are not allowed..
- Repairs/Improvements must be completed by licensed contractor(s) as required by local/state municipalities
- Repairs cannot be completed by a related or interested party (i.e. relative, real estate agent, seller, broker, etc.)
- Borrower selects contractor
Contingency Reserves
- Minimum 10% is required. Can be financed.
- With “Full” version – 20% reserves if renovation is major – foundation, room additions
Draw Requests
- “Draws” are funds paid to the contractor after work is completed.
- For “Streamline” – pictures of completed work is permitted
- For “Full” – Consultant inspects work
Other Important Items to Know about “Conventional” Renovation Loans
Maximum – Minimum Purchase/Upgrade Amounts:
Minimum: $5,000 (below this on an exception basis only)
Maximum: Limited to 50% of the “after improved” value
Occupancy: Primary, Second Homes, Investment Properties
Renovation Term:
- The renovation term for this program is a maximum of 180 days.
- The Borrower(s) is responsible for the work being completed within the escrow period. If the work is not 100% complete by the end of the Escrow period, loan may implement a .50% (on total loan balance) extension fee that will cover an additional construction term of 60 days. Borrowers will be provided an upfront disclosure detailing this information.
Contractor(s) Acceptance:
- loan does not “approve” contractors or refer contractors. A borrower must choose his or her own contractors to perform the needed renovation.
- All Contractors participating in the HomeStyle Renovation Program must complete a Contractor Profile Report. All Contractors are subject to the lender’s determination that the contractors are qualified and experienced, have all appropriate credentials required by the state, are financially able to perform the duties necessary to complete the renovation work in a timely manner, and agree to indemnify the borrower for all property losses or damages caused by its employees or subcontractors.
Multiple Specialized Contractors:
- Since this is a limited repair/renovation program, no General Contractor is required. However, A General Contractor will be required on all renovation projects over $25,000. Borrowers are not allowed to complete any of the work themselves as sweat equity.
Loan to Value Calculations:
The original principal amount of the mortgage may not exceed Fannie Mae’s maximum allowable mortgage amount for a conventional first mortgage.
- Purchase: For a purchase money transaction, the LTV is determined by dividing the loan amount by the lesser of the "as completed" appraised value of the property or the sum of the purchase price of the property and the total rehabilitation costs.
- Refinance Transactions: For a refinance transaction, the LTV is determined by dividing the original loan amount by the "as completed" appraised value of the property.
Eligible Renovation:
- There are no required improvements or restrictions on the types of repairs allowed. However, repairs or improvements must be permanently affixed and add value to the real property.
Costs and Escrow Accounts
- The costs of the renovations will be based on the plans and specifications for the work and on the Construction contract for all of the work requested by the borrower. The renovation costs may include a contingency reserve and renovation-related costs.
Contingency Reserves:
- Contingency reserves 10 % required for any unforeseen cost overruns that may occur during construction.
- Unused contingency reserves that were financed into the loan will be applied to the principal balance of the loan. If the contingency reserves were paid in cash, they may be refunded to the borrower.
- The contingency reserve may be considered as part of the total renovation costs or the borrower may fund it separately. The contingency reserve may be released only if required, necessary, and unforeseen repairs or deficiencies are discovered during the renovation. Unused contingency funds, unless they were received directly from the borrower, must be used to reduce the outstanding balance of the renovation mortgage after all of the renovation work has been completed and the certification of completion has been obtained.
- The loan is not re-amortized.
Draw Schedule:
- HomeStyle program has a maximum 4 draw process.
- The initial draw can be up to 25% of the total project and can be for materials for the project.
- The final draw will be at least 10% of the total project as retainage and funds will be released upon receipt and approval of final inspection, Certificate of Completion from Appraiser, signed All Bills Paid Affidavits and Lien Waivers.
Additional Draw Information:
- Signed Draw Request by borrower and contractor
- Signed All Bills Paid Affidavit
- review and approve the draw request and will release funds for disbursement
- A check will be issued in the name of the borrower and contractor and delivered to borrower via USPS
- An inspection of work to date will be performed at 50% complete
Final Draw Information:
- Signed Draw Request
- Final inspection/Completion Certificate will be required for release of final funds
- A Title Update showing property free from lien or encumbrance
- General Contractor’s Lien Waiver Affidavit
- Affidavit of Completion will review and approve the draw request and will release a check in the name of the borrower and contractor.
Change Orders and Cost Overruns:
- Changes to the initial plan are not permitted unless prior approval. Any work outside the scope of the initial plan is not permitted as the loan amount cannot be increased.
- If the project encounters cost overruns, those cost overruns will be the responsibility of the borrower to pay.
Renovation Term Extension Fee:
- .50% of the total loan balance. This is a post-closing penalty charged by the Escrow Administrator to extend the renovation period beyond the maximum renovation term of 180 days in the event renovation is not completed within agreed upon terms.
20 Replies
- 7yMatthew PorcaroBusiness MemberLender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
Hi Brandon - this is exactly what I did as my first REI deal. To answer your questions.
1. Statute of limitations regarding owner occupancy in the 203k are only effective until up to one year after the loan. After that, they aren't able to fine you.
2. Make sure you poll your network on what mortgage brokers they have, and once you get a list, interview them all, asking them how many 203k's they've done, and if they can give references. You MUST find someone with experience with the loan, otherwise it can get messy. I learned this the hard way.
3. In my case, I bought a bank owned duplex, and put $100k of rehab into the property. It was a big flip. It took about 8 months after closing. Once done, I had built enough equity into the flip to refinance out immediately into a different loan. Once I was out of the 203k, I then no longer had it as my primary residence, and now rent out both units for a strong cash flow.
4. Nope! That's one of the pro's of a 203k. You are the only "mortgage" that can bid on bank owned.
Please reach out if you have any specific questions, I didn't have much guidance when I did it, so I love giving people the help I wish I had! haha. Good luck!
- Lender · Asheville, NC · Member since 2019 · 60 posts · 50 votes7y
I have NOT read much on the subject, but would the Fannie Mae HomeStyle Mortgage be a suitable option?
- Realtor · Austin, TX · Member since 2018 · 52 posts · 32 votes7y
@Brandon Dubisky which state on the gulf coast? Does it matter to you?
- Rental Property Investor · Member since 2019 · 12 posts · 5 votes7y
I'm in Alabama.
- Rental Property Investor · Member since 2019 · 12 posts · 5 votes7y
Thanks for the insight Matthew Porcaro!
- 7yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Brandon Dubisky a couple of pointers here.
- Post in the Alabama forum to see if any good locals would have recommendations for you. Usually there's good people who monitor the state forums. Might be a good place to start.
- You can certianly use a 203K loan but as mentioned above a Fannie Mae HomeStyle loan will be a good option as well. A lot less paperwork to go through and the loan is easier to navigate as well. With FHA loans it is CRITICALLY important that you use a lender that offers BOTH FHA 203K types - meaning, "Streamline" and "Full". Using a lender that only offers one will crush a deal for you. So while there may not be a "preferred" lender....just make sure that your lender offers both.
@Randy Janoe thought this might be good for you too if you are interested. Here's some quick pointers on both loan types:
Important Items to know about FHA Renovation Loans
A FHA option to roll renovation/repair work into the loan. Down payment is based on the total of the purchase price + renovation costs. Loan can go slightly over appraised value if the need were to arise.
1.“Streamline Option” – or “Limited Repair Program”
- a.Total financed rehabilitation costs cannot exceed $35,000
- b.Maximum Sub-Contracts is 3
- If more than 3 are needed then a General Contractor will be required
- c.Repairs are limited to cosmetic repair only. Structural repairs are not allowed, such as room additions, foundation repairs, etc. Pools are also not permitted with Streamline Option
2.Full Repair Option
- a.Minimum of $5,000 in improvements
- b.203k Consultant is required
- i.FHA Approved Single Family "construction manager" who oversees and inspects the rehabilitation work from start to finish
- c.Nearly any type of repairs is allowed (luxury items are not). Pools are permitted.
- d.Maximum $75,000 in repairs or 50% of the after repair value, whichever is lower
Contractor Approval
- Contractor must be accepted prior to final approval and be responsible for the entire project. Multiple sub contractors with multiple separate contracts are not allowed..
- Repairs/Improvements must be completed by licensed contractor(s) as required by local/state municipalities
- Repairs cannot be completed by a related or interested party (i.e. relative, real estate agent, seller, broker, etc.)
- Borrower selects contractor
Contingency Reserves
- Minimum 10% is required. Can be financed.
- With “Full” version – 20% reserves if renovation is major – foundation, room additions
Draw Requests
- “Draws” are funds paid to the contractor after work is completed.
- For “Streamline” – pictures of completed work is permitted
- For “Full” – Consultant inspects work
Other Important Items to Know about “Conventional” Renovation Loans
Maximum – Minimum Purchase/Upgrade Amounts:
Minimum: $5,000 (below this on an exception basis only)
Maximum: Limited to 50% of the “after improved” value
Occupancy: Primary, Second Homes, Investment Properties
Renovation Term:
- The renovation term for this program is a maximum of 180 days.
- The Borrower(s) is responsible for the work being completed within the escrow period. If the work is not 100% complete by the end of the Escrow period, loan may implement a .50% (on total loan balance) extension fee that will cover an additional construction term of 60 days. Borrowers will be provided an upfront disclosure detailing this information.
Contractor(s) Acceptance:
- loan does not “approve” contractors or refer contractors. A borrower must choose his or her own contractors to perform the needed renovation.
- All Contractors participating in the HomeStyle Renovation Program must complete a Contractor Profile Report. All Contractors are subject to the lender’s determination that the contractors are qualified and experienced, have all appropriate credentials required by the state, are financially able to perform the duties necessary to complete the renovation work in a timely manner, and agree to indemnify the borrower for all property losses or damages caused by its employees or subcontractors.
Multiple Specialized Contractors:
- Since this is a limited repair/renovation program, no General Contractor is required. However, A General Contractor will be required on all renovation projects over $25,000. Borrowers are not allowed to complete any of the work themselves as sweat equity.
Loan to Value Calculations:
The original principal amount of the mortgage may not exceed Fannie Mae’s maximum allowable mortgage amount for a conventional first mortgage.
- Purchase: For a purchase money transaction, the LTV is determined by dividing the loan amount by the lesser of the "as completed" appraised value of the property or the sum of the purchase price of the property and the total rehabilitation costs.
- Refinance Transactions: For a refinance transaction, the LTV is determined by dividing the original loan amount by the "as completed" appraised value of the property.
Eligible Renovation:
- There are no required improvements or restrictions on the types of repairs allowed. However, repairs or improvements must be permanently affixed and add value to the real property.
Costs and Escrow Accounts
- The costs of the renovations will be based on the plans and specifications for the work and on the Construction contract for all of the work requested by the borrower. The renovation costs may include a contingency reserve and renovation-related costs.
Contingency Reserves:
- Contingency reserves 10 % required for any unforeseen cost overruns that may occur during construction.
- Unused contingency reserves that were financed into the loan will be applied to the principal balance of the loan. If the contingency reserves were paid in cash, they may be refunded to the borrower.
- The contingency reserve may be considered as part of the total renovation costs or the borrower may fund it separately. The contingency reserve may be released only if required, necessary, and unforeseen repairs or deficiencies are discovered during the renovation. Unused contingency funds, unless they were received directly from the borrower, must be used to reduce the outstanding balance of the renovation mortgage after all of the renovation work has been completed and the certification of completion has been obtained.
- The loan is not re-amortized.
Draw Schedule:
- HomeStyle program has a maximum 4 draw process.
- The initial draw can be up to 25% of the total project and can be for materials for the project.
- The final draw will be at least 10% of the total project as retainage and funds will be released upon receipt and approval of final inspection, Certificate of Completion from Appraiser, signed All Bills Paid Affidavits and Lien Waivers.
Additional Draw Information:
- Signed Draw Request by borrower and contractor
- Signed All Bills Paid Affidavit
- review and approve the draw request and will release funds for disbursement
- A check will be issued in the name of the borrower and contractor and delivered to borrower via USPS
- An inspection of work to date will be performed at 50% complete
Final Draw Information:
- Signed Draw Request
- Final inspection/Completion Certificate will be required for release of final funds
- A Title Update showing property free from lien or encumbrance
- General Contractor’s Lien Waiver Affidavit
- Affidavit of Completion will review and approve the draw request and will release a check in the name of the borrower and contractor.
Change Orders and Cost Overruns:
- Changes to the initial plan are not permitted unless prior approval. Any work outside the scope of the initial plan is not permitted as the loan amount cannot be increased.
- If the project encounters cost overruns, those cost overruns will be the responsibility of the borrower to pay.
Renovation Term Extension Fee:
- .50% of the total loan balance. This is a post-closing penalty charged by the Escrow Administrator to extend the renovation period beyond the maximum renovation term of 180 days in the event renovation is not completed within agreed upon terms.
- Lender · Asheville, NC · Member since 2019 · 60 posts · 50 votes7y
Originally posted by @Andrew Postell:
@Brandon Dubisky a couple of pointers here.
- Post in the Alabama forum to see if any good locals would have recommendations for you. Usually there's good people who monitor the state forums. Might be a good place to start.
- You can certianly use a 203K loan but as mentioned above a Fannie Mae HomeStyle loan will be a good option as well. A lot less paperwork to go through and the loan is easier to navigate as well. With FHA loans it is CRITICALLY important that you use a lender that offers BOTH FHA 203K types - meaning, "Streamline" and "Full". Using a lender that only offers one will crush a deal for you. So while there may not be a "preferred" lender....just make sure that your lender offers both.
@Randy Janoe thought this might be good for you too if you are interested. Here's some quick pointers on both loan types:
Important Items to know about FHA Renovation Loans
A FHA option to roll renovation/repair work into the loan. Down payment is based on the total of the purchase price + renovation costs. Loan can go slightly over appraised value if the need were to arise.
1.“Streamline Option” – or “Limited Repair Program”
- a.Total financed rehabilitation costs cannot exceed $35,000
- b.Maximum Sub-Contracts is 3
- If more than 3 are needed then a General Contractor will be required
- c.Repairs are limited to cosmetic repair only. Structural repairs are not allowed, such as room additions, foundation repairs, etc. Pools are also not permitted with Streamline Option
2.Full Repair Option
- a.Minimum of $5,000 in improvements
- b.203k Consultant is required
- i.FHA Approved Single Family "construction manager" who oversees and inspects the rehabilitation work from start to finish
- c.Nearly any type of repairs is allowed (luxury items are not). Pools are permitted.
- d.Maximum $75,000 in repairs or 50% of the after repair value, whichever is lower
Contractor Approval
- Contractor must be accepted prior to final approval and be responsible for the entire project. Multiple sub contractors with multiple separate contracts are not allowed..
- Repairs/Improvements must be completed by licensed contractor(s) as required by local/state municipalities
- Repairs cannot be completed by a related or interested party (i.e. relative, real estate agent, seller, broker, etc.)
- Borrower selects contractor
Contingency Reserves
- Minimum 10% is required. Can be financed.
- With “Full” version – 20% reserves if renovation is major – foundation, room additions
Draw Requests
- “Draws” are funds paid to the contractor after work is completed.
- For “Streamline” – pictures of completed work is permitted
- For “Full” – Consultant inspects work
Other Important Items to Know about “Conventional” Renovation Loans
Maximum – Minimum Purchase/Upgrade Amounts:
Minimum: $5,000 (below this on an exception basis only)
Maximum: Limited to 50% of the “after improved” value
Occupancy: Primary, Second Homes, Investment Properties
Renovation Term:
- The renovation term for this program is a maximum of 180 days.
- The Borrower(s) is responsible for the work being completed within the escrow period. If the work is not 100% complete by the end of the Escrow period, loan may implement a .50% (on total loan balance) extension fee that will cover an additional construction term of 60 days. Borrowers will be provided an upfront disclosure detailing this information.
Contractor(s) Acceptance:
- loan does not “approve” contractors or refer contractors. A borrower must choose his or her own contractors to perform the needed renovation.
- All Contractors participating in the HomeStyle Renovation Program must complete a Contractor Profile Report. All Contractors are subject to the lender’s determination that the contractors are qualified and experienced, have all appropriate credentials required by the state, are financially able to perform the duties necessary to complete the renovation work in a timely manner, and agree to indemnify the borrower for all property losses or damages caused by its employees or subcontractors.
Multiple Specialized Contractors:
- Since this is a limited repair/renovation program, no General Contractor is required. However, A General Contractor will be required on all renovation projects over $25,000. Borrowers are not allowed to complete any of the work themselves as sweat equity.
Loan to Value Calculations:
The original principal amount of the mortgage may not exceed Fannie Mae’s maximum allowable mortgage amount for a conventional first mortgage.
- Purchase: For a purchase money transaction, the LTV is determined by dividing the loan amount by the lesser of the "as completed" appraised value of the property or the sum of the purchase price of the property and the total rehabilitation costs.
- Refinance Transactions: For a refinance transaction, the LTV is determined by dividing the original loan amount by the "as completed" appraised value of the property.
Eligible Renovation:
- There are no required improvements or restrictions on the types of repairs allowed. However, repairs or improvements must be permanently affixed and add value to the real property.
Costs and Escrow Accounts
- The costs of the renovations will be based on the plans and specifications for the work and on the Construction contract for all of the work requested by the borrower. The renovation costs may include a contingency reserve and renovation-related costs.
Contingency Reserves:
- Contingency reserves 10 % required for any unforeseen cost overruns that may occur during construction.
- Unused contingency reserves that were financed into the loan will be applied to the principal balance of the loan. If the contingency reserves were paid in cash, they may be refunded to the borrower.
- The contingency reserve may be considered as part of the total renovation costs or the borrower may fund it separately. The contingency reserve may be released only if required, necessary, and unforeseen repairs or deficiencies are discovered during the renovation. Unused contingency funds, unless they were received directly from the borrower, must be used to reduce the outstanding balance of the renovation mortgage after all of the renovation work has been completed and the certification of completion has been obtained.
- The loan is not re-amortized.
Draw Schedule:
- HomeStyle program has a maximum 4 draw process.
- The initial draw can be up to 25% of the total project and can be for materials for the project.
- The final draw will be at least 10% of the total project as retainage and funds will be released upon receipt and approval of final inspection, Certificate of Completion from Appraiser, signed All Bills Paid Affidavits and Lien Waivers.
Additional Draw Information:
- Signed Draw Request by borrower and contractor
- Signed All Bills Paid Affidavit
- review and approve the draw request and will release funds for disbursement
- A check will be issued in the name of the borrower and contractor and delivered to borrower via USPS
- An inspection of work to date will be performed at 50% complete
Final Draw Information:
- Signed Draw Request
- Final inspection/Completion Certificate will be required for release of final funds
- A Title Update showing property free from lien or encumbrance
- General Contractor’s Lien Waiver Affidavit
- Affidavit of Completion will review and approve the draw request and will release a check in the name of the borrower and contractor.
Change Orders and Cost Overruns:
- Changes to the initial plan are not permitted unless prior approval. Any work outside the scope of the initial plan is not permitted as the loan amount cannot be increased.
- If the project encounters cost overruns, those cost overruns will be the responsibility of the borrower to pay.
Renovation Term Extension Fee:
- .50% of the total loan balance. This is a post-closing penalty charged by the Escrow Administrator to extend the renovation period beyond the maximum renovation term of 180 days in the event renovation is not completed within agreed upon terms.
Thanks for the info! All the stips seem reasonable.
- Rental Property Investor · Member since 2019 · 12 posts · 5 votes7y
@Andrew Postell great info! Thanks!
The bank has the property listed at 90k. Looking at some comps and just knowing my area I think the ARV will be 160-170k. I estimate the repairs to be 35k but I will get some quotes from 3 contractors.
My next question is since the property is bank owned, will they come down on the price or do they just list it at their bottom line?
- Jacksonville Fl · Member since 2018 · 15 posts · 10 votes7y
Andrew, would you please elaborate on this line of your post? My understanding was that 203k was only viable for primary residence. Am I misinterpreting this by thinking that it could be used for second homes and investment properties too?
"Occupancy: Primary, Second Homes, Investment Properties
- 7yMatthew PorcaroBusiness MemberLender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
Originally posted by @Michael Lambert:
Andrew, would you please elaborate on this line of your post? My understanding was that 203k was only viable for primary residence. Am I misinterpreting this by thinking that it could be used for second homes and investment properties too?
"Occupancy: Primary, Second Homes, Investment Properties
To chime in, he is listing requirements for a HomeStyle loan, not a 203(k). 203(k) you must occupy the property, at least for the first year, or until you refinance, whatever comes sooner.
- Birmingham, AL · Member since 2018 · 37 posts · 6 votes7y
@Brandon Dubisky I am in Alabama and literally just started the process and am currently analyzing a property. I will connect with you and perhaps we can help each other through this process since we are both approaching it with the same concept.
- 7yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Michael Lambert the first section labeled "Important Items to know about FHA Renovation Loans" is for FHA loans. The section "Other Important Items to Know about “Conventional” Renovation Loans" is for Fannie Mae. Sorry, I should have been more clear on it.
- 7yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Brandon Dubisky it's hard to speak for another bank here. It's probably hard to even relate my experience with this sort of thing since your market might be totally different than my market. Even so, the banks I have done this with take initial offers and then ask for your "best and final" if there are multiple offers. Again, I can't guarantee anything but that's what I have come across with these types of properties.
- Rental Property Investor · Member since 2019 · 12 posts · 5 votes7y
@Andrew Postell thats kind of what I expected. I also read that the asset manager may be able to accept up to 10% off listing so thats what I plan to offer. Is this common to your experiences?
- 7yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Brandon Dubisky I have not had experience with that at all. Everything in Texas has multiple offers on it. Even a full offer is usually rejected here.
- Lender · Marlton, NJ · Member since 2016 · 126 posts · 44 votes7y
Congrats Brandon on your steps into the rehab world. As you have already been told the biggest thing to make sure of is that you are working with an experienced lender in the renovation field. Personally, I have closed several hundred 203Ks and HomeStyles and I would make sure the person that you choose has closed at least 100 in the past 2 years for these programs are more complex then that of a regular mortgage. So your loan officer needs to be abreast of all the changes that come along from time to time. I do have several on going rehab projects in Alabama as well so I can help to connect with a local HUD consultant. If you have any questions please feel free to reach out.
- Rental Property Investor · Member since 2019 · 12 posts · 5 votes7y
@Bill Rich ok thanks I'll reach out to you.
- Financial Advisor · miami, FL · Member since 2017 · 16 posts · 7 votes7y
@Brandon Dubisky
Not a good idea. Fees will apply and they will not allow a good margin.
- Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes7y
@Brandon Dubisky Clients of mine use the FHA 203k quite often. It will have to be your primary residence for a year minimum as others have mentioned.
In my experience, to have 30% equity in a property after renovations are complete is not the norm. The best I have seen in the deals I have seen happen from start to finish is 20% and the norm is more 5-15%. Keep in mind, although it may not be completely translated in equity there is serious value in owning a property with all of the deferred maintenance addressed.
- Rental Property Investor · Member since 2019 · 12 posts · 5 votes7y
I expect this deal to have 33% equity if the appraisal comes in where I expect it to. That is using the average in my market of $100 a sq. ft. The low side would be 23% equity that would be at an evaluation of $85 a sq. ft.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.