Looking for a reliable FHA/203k Broker

13 Replies

Hi DC BP,

I'm rookie to REI but I'm looking to house-hack my way into my first investment buy finding a tri or quad-plex in the DMV area. One of the financial options I am looking at is getting a FHA/203k loan. Do you know of a reliable FHA/203k lender in the DMV area that works well with investors?

PS: I'm from NJ but went to college and lived in MD for about 6 years. Based on insane housing prices in NW DC area what do you think the best markets for <4 multi-family units are? I'm taking a swag and guessing PG county or SW DC - just not sure how friendly they are to property managers.

Best,

Mike

First, please clarify.... Are you planning on living in the property? I ask because you mention house hacking and FHA (which indicate owner occupied buyer), however, you then state that the lender would have to be friendly with investors. So, I was confused.

FHA 203B or 203K programs are only offered to owner occupied borrowers. This is a GREAT program as it allows you to finance the rehab through an escrow hold back based on a bid from a contractor that you and FHA approve to complete the rehab for your property. Lenders have to be certified to offer these loans.

PrimeLending is certified and offers this program.  Also NOVA home Loans does.  I have good experience with both of these lenders in Phoenix/Scottsdale, AZ.  I know they both do loans all over the nation, so you may want to check out their websites to verify the area the property is located in is offered by the lender.

I hope that helps!  Best of luck to you!!

@Mike Bonadies Multifamily properties exist in only the tiniest numbers in the DC area.  The areas you mentioned have virtually none.  NE/SE is where the greatest concentrations of them exist. Specifically in Trinidad, Hill East and Anacostia. You will get a few here and there sprinkled in some parts of NW as well such as Petworth.

Also be aware that due to the tiny amount of multis that exist, and that the highest and best use of them are typically as condo conversions, that it will be very hard to acquire one.  Also using a rehab loan to get one is going to make it even harder.  So have realistic expectations for your endeavor.

As for a mortgage broker, you should try reaching out to @Upen Patel

@Cara Lonsdale thanks for the suggestions! To answer your question. Yes I am talking about home owner occupied, but I was referring to tenant laws in the DMV area. Since I am a renter already in the area I know that for instance the Takoma, MD area particularly favors tenants in ways that can negatively affect landlords. Trying to avoid the toughest areas.

@Russell Brazil Thanks for the insight and suggestion. I'm a little surprised to hear about the lack of multi-families. I personally just moved to Silver Spring and there are at least 3 multi-families on my street (I live in one of them), I would have thought PG county (especially around the University of Maryland) would have quite a few. IAre there more prospects if I expand my search outwards to places like Colesville, Fairland, or even somewhere like District Heights?

@Mike Bonadies Nope...they simply exist in the tiniest numbers in the metro area.  Im surprised anywhere in SS would have 3 on the same street.  They are 2-4 unit properties?  5 or more units are commercial properties.  Only where I can think of with any close to SS would be in Takoma Park, where the incredibly restrictive rent control kills the value on them.

@Russell Brazil Wow, that's nuts. The ones in SS are all 2-4. They are all on Easley street. I live in one, but there are at least two others that I know of, plus I saw another house that was applying for what I think was a "separated apartment" (probably not using the right nomenclature for that).

Thats really strange. I always want to know where the multis are, since there are so few of them. When I check the zoning, the only properties zoned multifamily on Easley  is the big building at the end by Fenton.

http://mcatlas.org/zoning/

@Russell Brazil well I'll be damned, the zoning shows some of the properties I know are multi-family as not permitted. Is it possible that zoning changed or legislation changed and certain properties were grandfathered in (I'm completely unfamiliar with the zoning process)?

Originally posted by @Mike Bonadies :

@Russell Brazil well I'll be damned, the zoning shows some of the properties I know are multi-family as not permitted. Is it possible that zoning changed or legislation changed and certain properties were grandfathered in (I'm completely unfamiliar with the zoning process)?

A zoning exception would be recorded in the tax records of the property, so it is possible. However the MLS shows no sales of multifamily properties ever recorded on the street, so more than likely...it is an illegal use of the property. There is 1 accessory dwelling unit registered on the street at number 702 (http://gis.montgomerycountymd.gov/dhca_acc_apt/)....which is different from a multifamily property.

@Russell Brazil You certainly taught me quite a bit about the due diligence process through this exchange. Thanks a bunch!! One more pitfall for me to catch.

@Russell Brazil - I've been thinking about this more. Is there a legal distinction between renting out multiple rooms in a house verses renting out multiple units on a property?

For instance, could owner of a property zoned for only having up to two units just change his lease to indicate that you are renting certain rooms in his house? The owner could then "restructure" (IE add extra doors) the house to maximize privacy and give it a feel of a separate unit. The house would then be a de-facto multi-family unit.

Originally posted by @Mike Bonadies :

@Russell Brazil - I've been thinking about this more. Is there a legal distinction between renting out multiple rooms in a house verses renting out multiple units on a property?

For instance, could owner of a property zoned for only having up to two units just change his lease to indicate that you are renting certain rooms in his house? The owner could then "restructure" (IE add extra doors) the house to maximize privacy and give it a feel of a separate unit. The house would then be a de-facto multi-family unit.

 Lots of people in DC rent out their properties by the room.  The only thing is there is a city ordinance that only allows a certain amount of unrelated people to do this. I forget what the number is exactly...I think it is 5 but Im not positive.

What are the consequences of renting out rooms without the being a registered multi-family?

@Mike Bonadies

Did you find a multi-family property and a lender?  We don't do owner occupied, so this isn't a solicitation although I have some good referral source for 203K.

There's a meetup tomorrow night in Eastern Market at the Berkshire Hathaway office. Mihaela Amira is the Realtor that puts it on and she deals mostly with multi families. She pulls all the MLS listings etc... and shares them with the group.

Let me know if you're considering going and I'll get you the new address.  See my profile for email address or PM me.

Stephanie

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