When to use 203K vs your own money

[Arthur Banks]

How do you determine when to use 203K financing vs conventional (fund repairs with your own money/OPM)? Is there a minimum repair amount you consider when choosing? Obvious this would depend on the price of the home. But if a property needs cosmetic (paint, flooring) vs say more overhaul/updating (paint, flooring, kitchen & bath update) vs (total gut or major system repair). I can't see financing laminate and paint for 30 years. Or would you use the 203K no matter what and keep and leverage your money?

[Tim G.]

There are tons of variables but it just comes down to what works best with what you have.

There are two main types of 203K loans "streamlined" and "regular" a regular 203K will require a third party company that monitors the project and this means more checks and balances. This is required on deals that need more extensive repairs, structural etc... The streamlined is the better option always if it can be done, less outside involvement and that is the one I completed.

For me, the benefit to a 203K is you only have to put 3.5% down, so I would use it on a more expensive property personally as its less down. You MUST live in the property too so you might want to make a choice in an area you are okay living in. That is how I made my move, I put 20% down on lesser priced deals and still did rehab loans through my bank so there are ways to do these even if it isn't a 203k.

Hope this helps.