First time home buyer, in-house flip, FHA

7 Replies

Hello BP! Avid listener to the podcast, first time forum-poster. I am looking to mortgage my first home using a FHA loan. I want to do an in-house flip in the Virginia Beach/Norfolk area of Virginia and looking to mortgage no more than 60k. I am pumped to get started in real estate. Long story short, I'm open for any and all advice that BP has to offer. Thanks!

Tim Ponessa

Hi Timothy,

I'm not sure I understand. Is an 'in-house' flip mean you want to flip your residence? If that's the case, 'flips' are usually short term investments that you sell as fast as possible. If that's the case an FHA refinance will most likely be more expensive than a 2nd mortgage or some other line of credit. It usually costs a few thousand dollars to refinance (title, appraisal, etc.) so you won't recover that expense for a while. If you want to rehab the property and then eventually move out and rent it, that makes more sense.

Hi Brett,

Thanks for your reply! I used the wrong terminology I suppose; what you explained is what I want to do. I'm planning to buy a house using a FHA loan and live in it while I rehab it then eventually rent it out. Do you have any experience with this type of plan?

@Timothy Ponessa  

We own a house in Virginia Beach. We bought it with a VA loan (same idea as FHA) fixed it up while we were living in it and chose we to rent it instead of selling it. So your idea is definitely possible.

What I "wouldn't" be comfortable is your mortgage price of 60k. I have not been in the area looking for house in 2years but what I have been told is the market has improved. I know 2 years ago there was no way you could get a house for that price. I would be VERY careful. We ought at house in the 200's and did well.

You need to have an audience to flip the house and who can afford it! While you strategy is VERY doable, your price range is what I would evaluate!

@Timothy Ponessa  

welcome to Bp... As always, I'm glad to see another Hampton Roads affiliate join Bp. I have been here in HR all my life. I agree that your plan has merit but my only concern would be the areas that you would be looking into in order to get that $60k mortgage you want.

My suggestion is that you do plenty of research about that area after you have found that $60k home. If you want to talk in more detail concerning locations feel free to PM me.

Timothy,

Check into an FHA 203k. It should be a perfect fit for you. They do an 'as-is' and a 'subject to' appraisal (before repairs, & after repairs) and will give you money for the rehab. The rates are great. It may take more than one phone call to find a loan officer that will do this type of loan but the effort is worth it. Good luck finding the right market segment over there.

Thank you everyone! I will do more research and keep all of this in mind. I've done some homework on the 203k and I like it a lot. I will become more familiar with the market in the HR area and plan carefully. 

60K will be tough in Hampton Roads. I think you should raise it up to 100k and look in Norfolk. Find an area with ARV of around 160k and purchase at around 100-110k. That will leave you room to rehab and make a good chunk when you resell in the next year or so.

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