203k FHA Loan

[Jerad Gardner]

Hey there I'm a new and first time investor located in Minnesota and after reading and educating my self on many different strategies i am interested in the process and going the 203k loan route to purchasing a 3-4 unit multifamily property! Seeing as i have a small network in Real Estate and i am new to investing i don't have all of the parts/networks to make this a successful experience/project, so i was wondering if anyone in the Minnesota Minneapolis/St. Paul area (that is the area I'm looking to invest in) can break down what process and recommend some tips and advice about the process. As well as any network/contacts that specializes or has experience with the 203k FHA Loan process (like good places to go through for the 203k loan, contractors,etc.)

[Corey Blane]

@Jerad Gardner

If you'd like to discuss the process in detail feel free to send me a colleague request and I can answer any questions you have. 

Here's a quick overview though:

Step 1. Get Pre-Approved. It's at this stage where we perform a credit check, we discuss income and assets so we can determine your maximum loan amount.

Step 2. Preliminary Market Analysis [PMA]. Once you know your limits you'll start looking for homes. Once you've found a home you think has potential you'll complete the PMA with the help of your Real Estate Agent, Contractor and 203k HUD Consultant to help get an estimate of what the property's projected value might be after the renovation is complete. The market analysis should include:

• The extent of the rehab work required ( 203K HUD Consultant)
• The estimated cost of the work (203K Consultant or/and Contractor)
• The post rehab expected market value of the property (Real Estate Agent)

Step 3. Write the Sales Contract. Allow 40-45 days to close.

Step 4. Work Write Up, Cost Estimate & HUD Case #. With the HUD Consultant's help, a feasibility study and preliminary cost estimate is use to produce the SOR [Specification of Repairs]. After having refined and determined specs, the Contractor submits the bid for repairs. **Keep in mind that if the rehab work is less than $35,000 you don't need a HUD Consultant.d

Step 5. Appraisal.

Step 6. Lender Prepares Full Commitment once the appraisal and contractor's bid have been accepted.

Step 7. Loan Closing. 

Step 8. Construction Begins.

Step 9. Funds Are Released.

Let me know what other questions you have, I'm more than happy to help.