The downsides of 203k and FHA loans?

[Travis Stevens]

Hi everyone, I'm brand new to investing. I'm in the saving/research stage but plan to start with a house hack in the next 1-2 years. I've been reading a lot about 203k loans for rehab properties and FHA loans with 3.5% down. All the articles I read on deeper pockets make it seem as though this is a great avenue for new investors to take. I've also read lots of success stories, and one of my former coworkers had a good experience financing his first property this way.

However, there have to be significant risks/downsides. Are there any solid arguments against this tactic? Assuming you can’t secure owner financing, you don’t have enough for 20-25% down, etc, is this a good move? Or is it an easy way to end up upside down?

Thanks!