First Property & FHA 203K

[Justin Morris]

Hey All, 

   My wife and I have finally decided it’s time to do something. I’ve been a silent member and observer on BP for years. At this point I just think it’s time to jump it and do something. I was inspired by a BP podcast show where the guest said when asked what advice to give to newbies. “ Just do something, you’ll regret it when your 65 if you don’t.” So here we go. 

My wife and I want to house hack a duplex in the edge of a upcoming neighborhood in St Petersburg, FL where we live. We want to take advantage of the FHA 203k with this property as it'll be a full gut rehab. We would live on the units and rent the other. We went to view the property today and we both see a ton of potential and upside.

My main question is, how do I get estimates of rehab cost? I tried calling a couple GCs and they basically said they won’t do it with a project like that if we aren’t already the owners because it’s a waste of their time. I’ve run numbers using the snap rental cal with a general $100k in rehab costs built in and it all looks good but that’s just honestly an uneducated guess on my part at this point. Any advice on this? Is it better to just get the financing in place and under contract before approaching a GC? Any advice would be very apprenticed. Thanks! 

[Jeremy Taggart]

@Justin Morris You'll probably want to find a GC that has experience with 203k loans. There is a lot of red tape that goes along with them and unless you are familiar with the process it can be risky if you don't find the right contractor. With the 203k you are relying on the contractor quite a bit. You should be able to find someone that wouldn't mind coming out and giving you an estimate maybe at least offer to pay them for their time. You don't want to estimate if you aren't familiar with construction costs because more often than not people under estimate what it truly costs to rehab a place. 

Side note I love the 203k loan and think you could really do some damage if you utilize it properly. You can then refi out of it into a conventional loan if you have enough equity and use it all over again.