fixer upper in the san francisco bay area

[Tim Lemons]

I'm starting a new job in the bay area and I see it as an opportunity for a long term investment in California. Are there any agents on here with experience helping investors find fixer upper properties that they can use a 203k loan with or forclosure/shortsale properties? I'm trying to get creative because my budget is only $600k.

[Chris Mason]

Originally posted by @Tim Lemons:

Thanks for the answer @Julia Latreille-Favre 

My plan is to purchase it and live in it for the foreseeable future.

I've been hearing that I should probably do a regular loan first and then refinance with the 203k so that I won't have so many complications during closing. Do you see any issues with going that route?

Good news is about 20x more likely to happen if you buy using normal financing and do the 203k as a refi down the road. Listing agents think 203k is a dirty word and advise their clients accordingly. The trusted listing agent is going to push the lowball HML or cash backed $300k offer over your $375k FHA 203k offer when presenting multiple offers to their seller. Of those that pull off 203k in the SF Bay Area as an arms length (ie, not buying from your buddy or uncle or cousin) purchase mortgage (rather than refinancing down the road), easily over half are either a) Realtors b) General Contractors or c) Salespersons in some other capacity. Everyone loves to talk about FHA 203k, for whatever reason it's mostly the salespersons who actually pull it off (this will vary by market, Cincinnati and Oakland are very different places).

Bad news is that means that at closing the property needs to be in basically financeable condition. It can be old and dirty and nasty, but it needs to be a complete and functional house. Often these are probate deals - grandpa died 10 years ago, grandma just passed, and none of the heirs want to fix it up so it shows well.

Lots of competition for this, HGTV Effect. But this is the Bay Area so there's lots of competition for everything. :)