All Forum Posts by: Spencer Sturgill

Hello all, 

I'll be in the position to make my first deal in about 3 months, so I'm planning how to finance it. I want to do either a simple fix and flip, or a multi-unit house hack BRRRR. Either way, I will get an FHA for the 3.5% down, but I'd like to do a FHA 203(k) so I can use leverage on the rehab and not have to go completely out of pocket.

Have any of you done this, or do any of you have any words or advice for or against doing this? I greatly appreciate any help!

Thanks,

Spencer

@Drew Sygit 

Few questions then if you're up for it: 

1.) Is it realistic to think I could get a FHA 203(k) for a 4 unit with considerable rehab needed?

2.) Do down payment rates still sit at 3.5%? 

3.) When I go to get the loan, would you recommend a specific lender, or is it just fine to go to any chain that offers it? 

4.) I understand I may be able to include 75% of expected rent in my DTI when getting qualified - is this correct?

In full transparency this is appealing to me because it offers the most leverage out of any loans I've seen yet, but this would be my first deal; would you advise against going this route?

@Drew Sygit 

I'm glad I came across your comment - it is auper helpful and informative. I've been thinking through financing a fix and flip, but figured I'd have to finance the mortgage and pay out of pocket for the rehab. 

Have you personally used a FHA 203(k)? I'd be really interested to hear how the process went for you.

@Melissa Justice those were very helpful thoughts! 

The 1% rule is a rule of thumb that if the monthly rent for a property is at least 1% of the purchase price, is is generally a good deal, barring any other negative factors, such as the one listed above like declining job rates or a dying city. 

For example, if you find a property listed for $150,000, and in doing your financial due diligence you find you can rent it for $1,500 a month, there's a good chance it may be a good deal.