Introduction and what is your forecast?

Question

I rehabbed a few properties in the early 90s where there was a decent supply of houses at the HUD auctions and not a huge amount of competition from homebuyers.  In about 95 I went to an auction with about 2000 home buyers and dropped out of the rehab business.

Lately it has seemed that the business of a rehabber involves too much chasing deals and things like posting hundreds of signs.

I've been waiting for home prices to start heading south, thinking that foreclosures would go up and home buyers would be wary and there would be a good market again for buying REO properties.

It seems like those times might be coming and I'm just starting to refamiliarize myself with the business.

Currently I am a loan officer in Southern California involved in HUD loans on affordable housing projects, mostly elderly housing.  I also have a lot of experience as a residential appraiser.

What do you think about the immediate future?  How are you finding your properties?  And just generally, hello and I look forward to participating here.

Jay Hirsch · Answer

My current job is originating HUD insured loans on multifamily properties, mostly on properties with at least 30 units and I am pretty much focused on affordable housing with project based section 8 contracts.

If you are interested in these type of properties let me know, but I suspect you are interested in single family and 2-4 unit properties (as I am for personally rehabbing).  There are HUD loans for these properties too.  There is a FHA 203b loan and a 203k-rehab loans.  There are restrictions on mortgage amounts which vary from region to region.

When I was last involved with these loans as an FHA appraiser and a 203k consultant, 203b loans were only allowed for owner-occupants, but 203k loans were for investors too.  At some point I believe they changed 203k to disallow investors, but the HUD web site now just says investors are not allowed to use 203k on condos, so maybe it is ok for SFRs and 2-4 units.

A 203k allows you to get a loan to purchase a property and borrow extra for repairs.  The money for repairs are drawn down periodically as they are completed.  The program became fairly popular at one point, but then less so as housing prices boomed and loans became cheaper and cheaper.  Perhaps 203k will become more popular in the future as well.  Well, those are my impressions anyway, I haven't been involved in 203ks for about 10 years now.

Jim Francis · Answer

Hey. I'm pretty new here too.  I agree with you on the market coming down.  Seems pretty logical.

I wanted to ask about your HUD loans.  Can anyone get a HUD loan?  How exactly do they work?