Cranford, NJ · Member since 2020 · 6 posts · 1 vote
Hi BP,
Am a newbie investor looking to househack by buying a duplex as my primary residence in Northern NJ (looking for towns with good public districts, low crime, commutable to Manhattan). Have been looking into FHA 203(k) financing to buy a property that needs a little work / updating so as to add equity right away and not having to put the full 20% down when buying in a class A neighborhood. Would love to talk to other investors who have taken this path to hear about any lessons learned or advice on factors to take into consideration.
Longer term plan would be to owner occupy the duplex for 1+ years then buy a SFH in the area as my primary residence and keep this duplex as a rental property.
Lender · Fairfield, CT · Member since 2018 · 183 posts · 82 votes
6y
Hi @Tessa Schaaf - I am not an investor in Northern NJ, but I do lend in NJ and have financed properties with a 203k loan. I would be happy to speak with you about the differences between a 203k and regular FHA loan and the pros and cons.
When I was looking for my first investment property I looked at all the FHA/low downpayment options. Most North Jersey markets have a pretty high barrier for entry in desirable areas so this is a good idea. Things I looked for in terms of commutable towns, I kept my eyes open for train stations in town or direct bus routes. This not only helps you directly while you house hack but is a big draw for other potential tenants who work in NYC.
With 203k keep in mind that your rehab costs are added to the mortgage and you'll be paying PMI as well, so make sure you triple check your numbers. Additionally, with an FHA mortgage, you must occupy the property for at least 1 year as your primary residence. You said you planned to live there and then move. Think about whether you'd want to use another FHA loan on the next property.