Financing HUD renovation? Opinions?

[J G]

I recently won a bid on a house for 30k, and would like to hear your input on what's my best course of action.

I purchased this property as a buy and hold, and am looking to rent it out indefinitely after a few months of me living in it while i'm fixing her up.

After a run down assessment of the property, i'm estimating around $10-15K is needed in order to make it appealing when the time comes for rental.

I have around 8k of emergency savings in the bank that I can use, but I'd rather not touch that money since I like having a small cusion just in case life happens to throw curves.

So what would be my best option for funding the renovation? I've done some research on the 203(k) loans, and it sounds like a good idea, but what draws me away is the additional interest over the life of the loan if i tie it in with the mortgage, which will cut into monthly income when the house rents later on.

Should I take out a small personal loan to fund the project? Of course it would require more of my own money to be paid up front, but the interest on the loan ends when the balance is paid, so the only thing remaining would be the mortgage amount.

Any other options/opinions?

[Emilio Ramirez]

Looks like you are going to have to learn how to hit curve balls. Ok just kidding.

Don't know about the HUD program, but if you are living there to fix it up, why not stay for a year and a day which the IRS defines as two years or the minimum requirement to define owner occupied property. Then you could sell within five years and pay no capital gains taxes on it. I'm assuming that over the course of that year you will be able to remodel bit by bit and pay cash as you go from a paycheck.