Experience with a FHA 203(k) Loan

[Gregory DeRosso]

So I'm scourning to find my first deal. I found a duplex which after I run the numbers it seems ideal for a house hack for the first year or so. I plan to live in one unit as I rehab the other and then proceed to rehab my "live in" unit. Is there a time limit in which I no longer have to list the property as my primary residence or am Im locked in for the life of the loan.  Before I contact the lenders and ask them, what are your experiences? 

[Perry Farella]

To give a better example I recently had a client buy a 4 unit building in Chicago for $82,000. All in in with architects fees, Permits, HUD Consultant fees etc. his total rehab budget with a 15% emergency reserve became $398,372. So 82,000 + 398,372= 480,372 X .035 for down payment, etc. leaves 459,031 final mortgage size. But his ARV came out to 425,000 so he is mortgaged to about 108% of ARV. FHA allows this even though we might normally not like it but the future rents more than carry the total mortgage payment of about 3112.00 all total each month. The property is a total interior rebuild, new floor plan, separate HVAC for each unit, 2 baths each unit so a condo high quality like rehab for sure. But all possible with just 3.50% down if ARV supports it and rents support it. Buyer lives there for 12 months then moves on and leases all 4 units. Buyer is a first time buyer too.