BRRR or BURN? Healthy Neighborhoods Loan in Baltimore

[Courtney Rollins]

So the underwriter came back with an official approval of my 20% down conventional loan! Whoo hoo! However, we still had to exit the deal on the table after the inspection found serious foundational issues beyond the scope of what me and my partner want to handle for our first deal. (Thank you BiggerPockets forum for encourage us to be patient!) We want to strike quickly and take action, but we know that we don’t want to jump into a disastrous deal. Btw, our focus are on buy and hold single family units in transitioning neighborhoods in Baltimore.

Last night, I came across a very interesting program in Baltimore called the Healthy Neighborhoods Rehabilitation Loan. This loan sounds amazing. It requires 3% down, with no private mortgage insurance, at least 1% below Fannie Mae interest rate, and it gives you up to 110% of the after rehab value of the property to apply to the rehab job along with free design consultation. They are basically paying folks to invest in Baltimore. There are beautiful row houses and brownstones around some promising, transitioning neighborhoods in Baltimore (Reservoir Hills, Union Square, Waverly) that fit the requirements for the loan. The question that I need to pose the lender and to the BP community is how would I or would I be able to access the funds from the loan and apply them to another investment after the rehab is done? Also, since the home must be used as a primary residence, what if the home needs serious rehab before it is habitable? I’m sure there are tons of other questions I should consider. Can’t wait to get someone on the phone or in front of me that can answer these questions today. The journey continues!