All Forum Posts by: Chris Gillins

OK BP, Here's the situation, I am looking at a property to purchase in Vancouver, WA as my primary residence with a separate unit upstairs that I want to rent out, and then hold onto the unit as a rental.

2/1 on the main - 937 SF

2/1 upstairs - 761 SF

Unfinished Basement attached to main - 960 SF

Asking price $175,000

The price is fairly comparable to the area and I am planning to go with a 203K loan. The construction company I work for has agreed to be the General Contractor on the project, so that I can do a lot of the work myself, which I love.

The house was originally built in 1925 and needs updating, the snag I ran into today is there was a previous offer on the property going with FHA, and apparently at closing the FHA agent decided the upstairs was not a legal duplex and instructed that potential buyer to gut the kitchen. I have a call into the city planning office to find out what will be required to bring the property into compliance.

I think finishing out the Basement to add 2 bedrooms and a bath and redoing the main to open up the kitchen and put in a master suite would enable me to get an easy $1000-1200/mo rent for that unit, the upstairs goes for $800-850 in this market. Not quite 2% but it would be a good primary to get student loans paid off, and start flipping.

Question, anyone had experience bringing a non-conforming property into legal compliance as a duplex, any advice on the process, or will this just be a nightmare not worth looking at. Been having a difficult time finding a duplex to live in that the family agrees on, in the budget. Our other option is buy an SFR flip with the 203K and cash out refi after 1 year and start flipping...

Eric Dufault not to come off as preachy, but the 203k loans are not designed for investors but for OO. On the other hand it is a good loan structure, but one of your group will have to be a licensed contractor. You will be going through inspection processes with your lender and the FHA is pretty stringent on the appraisals of the work. Doing it on the side may not work. If you're currently renting, maybe look at the standard 203k loan so that you can lump some of the mortgage payments into the loan. But again, this is for OO only and I wouldn't go the shady route as investors have a bad enough rap out there. Maybe look into a HUD house with a homeopath renovation loan? 10% down for investors with rehab costs included?

Eric Anderson As mentioned above if you cannot afford anything other than 0 down, it would be advisable to save until you can at least put 3.5-5% down. The FHA 203k is a great option in that you can lump the rehab costs into the loan, and even some of the mortgage payments while the place is getting fixed up. But this is for OO only, and remember if you do buy a multi and you have no money, one major problem from a bad tenant in a nice fixed up place and you're up a creek.....

@Aaron Montague Nice links, another really good source of information on 203K loans is

http://203kcontractors.com/faqs#min_max_repair_amount

We are currently pre-approved for the 203K Loan, going with the Standard/Full Loan Package, just hunting the perfect deal. Yes, it does require a little more paper work with the FHA, need to have the 203K Consultant involved and handle inspections/appraisals and such, but the fact that I can get into a property, have up to 6 months of mortgage payments included in the cost of the loan so that we don't have to worry about double rent/mortgage payments, rehab my primary residence the way we like it, save a 1930-1940's era farm house, and then refi into a conventional cash out mortgage later on and use that equity to go buy rental properties.......nice way to get started, without having to put up a lot of cash or live next to tenants/in town (I'm a RURAL kinda guy). You can also go the Streamline route, less hassle/paperwork, more for the little cosmetic rehabs for a primary residence, but probably not as much equity out on the refi, all depending on the property and location of course.

Awesome !

I WILL MAKE AN OFFER IN THE NEXT 5 DAYS!!!

Yeah, just got approval for the FHA, now to find the deal.....

I was wondering the same thing, and had my mortgage broker check on this today, and she was told by Ben Renyolds of the USDA Rural Development SFR Office in Olympia that this was never acceptable. I had had previous conversations where I was lead to believe that this was acceptable with up to 4 units owner-occupied. Anyone have any references and/or actual purchases utilizing this method in Washington State?

Thanks all,

Happy wife, happy life is the catch all. I don't mind living next to tenants, but then again, I am gone all day and she is home with the kids. We both want to get into real estate, but having moved 9 times in the 7 years we've been married, I definitely see her side in that she wants her own space. I think the right situation is out there that we could both agree on, it's just might take a little while to find. We're in an apartment right now, but just moved from a SFR rental, and we both miss that, but I think the payoff of getting a rental under our belt first would be better in the long run. Thanks again, love BP, great resource!

So I've been listening to the podcasts for a while and reading all I can, (currently Ken McElroy's ABC's) and I am going through the process of securing pre-approval for our first home loan. Problem being, I want to look solely at duplexes, multi-fam, etc. My wonderful wife wants a SFR that has flip potential but that we would live in for a couple of years. I realize that the SFR is going to eat up a lot of cash and take time to fix up. I can do most of the work myself, but would rather have the cash flow. Any suggestions on how to help convey the benefits of the duplex idea?