FHA one step close loan

[James Pegues]

Hey everyone!!! I bought a SFH at the end of 2020 and the value has gone up quite a bit since then. My plan was to fix it up and then rent it out but then I heard about the FHA 1 step close loan product where the cost of construction and land could be rolled into one loan and I would only have to qualify 1 time. I think I could sell my house in a few months and have the money to put down 3.5% on a new 4-plex but was wondering if anyone has had any experience with this? I know you could only have 1 FHA at a time so that sounds like it would be a lot better return than the SFH I have right now. On the other hand, with as many offers as I get from people trying to buy my house, would my area be considered more valuable or growing? If so, should I keep this house, fix it up, and rent it out? I'm in Arlington TX.

[David Vanlandingham]

@James Pegues depending upon your market, your doors in most cases should appraise higher than the build costs which gives you a better equity position. This can be useful if you choose to tap into that at a later date.  This is another benefit of new construction along with builder warranties, less concerns initially on capex items and better insurance rates based on everything being new.  Now new construction by no means is hassle free!  Due some due diligence on your builder.  No builder is perfect but how they handle "imperfect occurrences" speaks volumes about their willingness to stand behind their work.  Look for builders who provide a 10 year structural warranty and 2 years on mechanicals.  Cash Flow is great but leveraging a fast appreciating property helps to speed up the process of scaling.