REI In the oven... Ready to start!

[Scarlett Noboa]

Hi and Good morning!

Straight to the point!. I am a New Real Estate Agent who fell in love with the RE investment world, so I’m looking to buy our (husband and I) first investment property, in the area I want to is so expensive right now, so we decide to look in another market that is 30 minutes commute from this location and we are looking to do house hack in this property.

I'm looking to buy a foreclosure property that needs major works, I know I can apply to a FHA 203 K Loan, but I want to know the pros and cons from this loan. I have the money for the down payment and the rehab, but they will not lend me just a FHA if the house is not habitable.

What are the advice from you, what should I do?

[Clark Kirkpatrick]

I think that doing a lot of the work yourself on your first deal can be a really important learning experience, because that way you'll understand forever how much work goes into that and you'll learn to understand how remodeling works. If you stay in the business, that's really important. But when you get your rehab budget, it will probably be twice as expensive as you expect, and take three times longer. So be prepared for that.

I think you could do well buying an ugly but habitable place with a conventional loan with a very small down payment, then fixing up a unit and renting it, fixing up the next unit and renting it, etc. while you live in one of the units for at least a year. Then when they're all fixed up, you can refinance it. Since it'll be worth a lot more, you can pull your money out just like a BRRRR. It's basically the same strategy, but without the high interest payments of borrowing from a hard money lender.