Looking for some guidance with this particular deal that I am looking to get into as my first buy and hold property. I am currently under contract to purchase this foreclosure 4-unit for 37K and it needs a lot of work (between 60-80K). The property is located in a highly desired prime location in Cuyahoga Falls, OH and has a potential ARV 170-180K. I am doing the owner occupant 203K FHA loan as my option of financing, but might run into some issues with coming up with needed amount to put down then initially had figured based on the total amount of repairs needed to be performed. The property has been inspected and I have received a preliminary feasibility report categorizing the mandatory, recommended, and desired repairs. I am in the process of receiving quotes from 3 different FHA certified contractors. Are there any suggestions on some other creative financing options I can do or is this a project that might be too much for me to take on with this being my first buy and hold? I was thinking a possible partnership or a basic short term small hard money loan to come up with the difference. I have a detailed cash flow potential chart of the property I created. If you want to take a look at it to better asses my situation, just send me your email address and I can forward that along. It is a great deal and would hate to miss out on this potential opportunity. Any advice would be very much appreciated.
Thank You in advance
@Kenneth Rogers Cuyahoga falls is a nice area. Your deal looks pretty good to me. If it were me I would not want to let the deal fall through.
Some ideas I have for you coming up with some more money
1. Small Personal loan from your bank or credit union
2. Discover card Personal loans. 3-7 year terms. They do up to 25k No points or fees. 8% interest. I have used this myself to help fund a duplex.
3. (Generic answers im sure you have already thought of) Friends, family, co-workers etc.
Kenneth, I think if you bring in a partner it would kill the 203k deal. first see what mortgage amount you qualify for if the purchase price plus the cost of the repairs are more than you qualify for then you can ask a relative for help with the down payment. You can also use the rent from the unit as income to qualify. You can use 50% of the income from the units.
That's an amazing deal in the Falls, we have a single family for 80 that's not in the best of shape. We are trying to get more people to invest in the falls area just because of the potential. Best of luck with your venture!!
Does the FHA require 3.5% down for the total value of the loan?
I'm fairly sure the max renovation budget is 35k, correct?
Do you need to put down 25% of the renovation budget above 35k?
Aaron the streamline 203k is $35000. The Max on a full 203k depends on the fha county limit. Look up the fha limit for Brookline Mass. and that is the limit on a loan. Example the FHA limit is $425,000 then that is loan limit. So if the purchase price is $125,000 the renovation limit is $300,000. The 203k is FHA where the down payment is 3.5%. It must be your primary residence.
Excellent. Thank you very much for that little tidbit.
Yes thank you to everyone for the sound adivce My mentor had brought up a good point last night and wanted to hear everyones thoughts. When I get it reappraised say for 160k or 170k, would that cause my taxes to increase because they are appraising it for a high value and essentially effect more of my cash flow? I However, if for some reason the deal doesn't work out, are there any suggested exit strategies? Some things that come to mind would be to buy it with 20% down(come up with the difference once again) as a convetional loan, soley on the purchase price of the home(37K), and just turn around and sell it for a small profit(essentially wholesale it), that way I don't walk away from the deal with nothing and end up spending all this money doing the leg work.
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