Rental Property Investor · San Diego, CA · Member since 2016 · 12 posts · 12 votes
Happy Thanksgiving BP Community, looking into nuances of 203k loans and it seems like you can use construction funds for adding on, curious if anyone has had experience adding an ADU, or converting garage into studio, with the intent of house hacking.
Would love to hear your experience and any hoops you had to jump through to pull it off.
I’m in San Diego where ADUs are being approved from what I gather.
Rental Property Investor · Brookings, OR · Member since 2015 · 68 posts · 28 votes
5y
The best place to ask this question is with your local city building/zoning/planning department. These people can guide you through how and whether it is possible for your specific situation and lot.
In my area, I had to submit the engineered plans for approval first. Then, get a checklist of items completed prior to construction like local fire department, electric company, and septic/sewer approval. Once construction starts, a city inspector visits the site when prompted after each required check points like foundation, rough in plumbing, electrical, drywall etc. Any step that applies to your plans will be reviewed and after the final check, the city will issue a certificate of occupancy.
It was a huge undertaking in my area, but the result was definitely worth it. If the numbers make sense in the long term and you have the drive to complete all the tasks with patience then do it!
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
5y
@Conner Parks to answer your question directly, yes a 203K loan would allow this. Keep in mind that FHA loans do have pretty strict loan limits....and depending on your property it might be hard to fit it in with a southern California home. Fannie Mae does also has a Renovation loan that might be a bit more fitting in your area. In either case I would suggest getting with a local loan officer that can write both loan types to guide you if they can make either fit on your property. Providing that it can....then either loan would work for your scenario. Hope this helps!
Real Estate Agent · Tempe, AZ · Member since 2011 · 1k+ posts · 543 votes
5y
Yes you can add an ADU or do a garage conversion, but either option must be attached to the main house and a really good HUD approved FHA 203k Consultant can guide you through that process and how to do it.
FYI - your FHA 203k Lender is responsible for selecting the 203k Consultant for you.
Rental Property Investor · San Diego, CA · Member since 2016 · 12 posts · 12 votes
5y
@Jennifer Z. Thanks for sharing your story, super helpful. I'll be sure to pay the city a visit! I do anticipate a lot of lifting upfront on this, but it'll be great for us in the long run.
@Andrew Postell Thanks for the info, very helpful. I think we'll be good on the loan limits, purchase of 500ish and i'd imagine 50k for construction.. Will keep that top of mind though.
@Paul Welden Thanks Paul. Interesting that it has to be attached, we've been looking at some detached garages as good potential ADUs, we'll lean on our 203k consultant to help steer us in the right direction. Thanks!
On a side note, make sure you use a contractor that knows and understands the 203k instead of just any old regular licensed/insured/bonded contractor. The Contractor needs to understand the different versions of the 203k, the timelines, paperwork, payment process, guidelines, etc.
I recommend you use a contractor with the designation as a Certified 203k Contractor and they are found online at 203kContractors.com.